Oooh, now they're getting tough!

I can barely contain my laughter as I write this sentence: Fannie and Freddie are going to crack down on people who send "jingle mail."

That, in case you're not up on your neologisms, is the expression for when homeowners upside-down on their mortgages send their keys back to the lender.  The oh-so-serious tones of syndicated real estate columnist Kenneth Harney must be seen to be believed:

On March 31, Fannie Mae sent
out new guidelines to lenders intended for walkaways and other
foreclosure situations. Fannie will now prohibit foreclosed borrowers
from getting another mortgage through the giant investor for five
years, unless there are "documented extenuating circumstances." In
those cases, the mortgage prohibition is for three years.

Even after five years, borrowers with foreclosures in their files
will be required to make at least a 10 percent down payment, and will
need minimum FICO credit scores of 680.

Oooh, you'll have to rent for five years?  You'll have to put 10% down?  You'll need a FICO of 680?  Oh, the agony!

Apparently this is all targeted at websites that promise to help you buy another home in as little as two years after a foreclosure.  But how many ex-homeowners, burned by a tanking housing market, would be eager to buy in again so soon?  The proprietors of such sites must work on the assumption that the real-estate industry has successfully brainwashed us all to believe the mortgage-interest deduction makes homeownership a can't-miss proposition, save for a once-in-a-lifetime occasion like the present.

I have a hard time believing Fannie's "crackdown" will do much if anything to cut down on the number of people who choose to walk away from their homes.  By the time the dust settles, doing so might even be a perverse badge of honor.

The Daily Reckoning