I do agree that with 45 staff, they will accomplish nothing. Not a dent.
However, the most significant thing about this article is how misleading the headline is. They are not really going after strategic defaulters as much as those who commit application fraud. The appalling thing is that after 5 years of this crisis the news media hasn't learned very much. We have a columnist in the Palm Beach Post who is dedicated to the real estate market and she makes similar blunders every week.
The best thing I have read on the housing crisis is a white paper from the Federal Reserve Bank of Atlanta Foreclosure Externalities: Some New Evidence. My read on that is they show that delay from the lender's decision to pursue foreclosure, to the actual foreclosure and change of title, is the key to suppressed values in surrounding properties. Having a house linger in limbo (as a rental, or borrower living there rent-free, or abandoned) for 2-3 years(as is very typical in FL and NY), is what hurts. And yet you see state level efforts, as passed in CA recently to slow the process even further.
The problem was essentially caused by misguided intervention in the mortgage market by federal regulators. And you see the reflex reaction is to layer even more regulation on the sector, when the solution is to bite the bullet and speed the process of moving these properties on to their next owner.
Thanks for the link to the Fed white paper. I plan on reading it. As for the article, it’s a great example of reporter conflating two completely different issues. You CANNOT be prosecuted for a strategic default in ANY state. It’s not a criminal act. Period!
A borrower’s decision to walk-away in the case of strategic default is a pragmatic one and usually comes down to whether or not they see value in holding onto the asset. If you happen to live in a non-recourse state, the 1st lienholder will not be able to collect on that foreclosed debt either. (Subordinate lienholders may be able to pursue you to collect the debt).
Lying on a loan application *may* constitue fraud, in which case a borrower could be prosecuted. However, that’s entirely different from strategic default. It would be nice if these reporters actually understood what they were writing.