Posted by & filed under Stockton Real Estate.

By Mandelman


Last week, the LA Times ran a story: “Fannie Mae, Freddie Mac to go after more strategic defaulters,” with a subhead that read: “The Federal Housing Finance Agency is pushing Fannie and Freddie to chase down borrowers who can make home loan payments but choose not to.” I saw the story, shook my head and decided to ignore it.

Then I read a couple of lawyers that I happen to know, came out in response to the article by explaining that California and Washington were non-judicial foreclosure states and therefore there could be no deficiency judgments to pursue… which I have to admit, without having read the LA Times article, I found to be as irrelevant as it was obvious.

Then I read the LA Times article, something I really didn’t want to do, but luckily the convoluted and yet banal nature of the thought process involved was readily identifiable within the first few paragraphs.

Writing for the LA Times this time out was Lew Sichelman, whose ability to remain oblivious to his interweaving of unrelated facts throughout the article was truly something to behold. At one point he nonsensically says, “Going after strategic defaulters is big money,” a reference to the inspector general’s office apparently criticizing Freddie Mac for leaving “billions on the table.”

What was the inspector general referring to when referencing a table with billions left upon it? Why, abandoned deficiency judgments, of course. What does that have to do with strategic defaults? I’m not at all sure, but before this discussion gets any goofier, we had better return to the beginning, because if we continue on that path as laid out for us by Mr. Sichelman, we are likely to become disorientated to the point that someone may actually fall down and hit his or her head on the hard floor. And when I say someone, I’m referring of course to me.


Okay, so there are a couple of things going on here.

One is Fannie’s and Freddie’s well-known predilection with the idea of someone strategically defaulting on his or her mortgage, which is the sort of thing that, should it occur in any number, might screw up Fannie’s forecasts for future defaults as presented by former czar of the FHFA, Ed DeMarco, any number of times last year as part of his defense of the agency’s indefensible position on principal …read more

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