This won’t have much affect on Arizona real estate other than making the pool of potential Arizona home buyers smaller.
I doubt Fannie Mae’s 7 year ” lockout” of strategic defaulters will have any significant impact on the number of strategic defaults in Arizona. The incentive is just too big. If your mortgage is twice the value of your home you have an enormous incentive to walk away and simply rent for 7 years.
Calculated Risk says the announcement suggests strategic defaults are increasing.
Good point but if Fannie Mae really wants fewer strategic defaults they should focus on creating a time machine so they can go back in time and shoot themselves.
ADDED: The New York Times came out with an article this morning critical of the Fannie Mae policy. One guy says, sure Fannie Mae wants to punish strategic defaulters so they will be less likely to do it again in the future but “the banks were bailed out, and their executives walked away rich. ‘Why should I pay my dues when they did not?'”