If you are planning on just walking away from your home even though you might be able to afford it, a recent rule change by Fannie Mae may make you think twice about it.
Fannie Mae announced that they are changing the rules so that there is a seven year lockout for borrowers who are considered "strategic defaulters".
WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.
"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio management. "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."
In addition to the lockout period, Fannie Mae will take whatever legal action is allowed to recoup any unpaid balance of a loan as a result of a strategic default. So it is more important than ever to try to work with your servicer if you are having mortgage problems - and if you are one of those who cannot afford your monthly mortgage payment, there are also workout options such as a short sale or deed-in-lieu of foreclosure where you could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.