Penalties Increase for Borrowers Who Walk Away

Borrowers who consider walking away from their mortgages have yet another reason to think twice.  Fannie Mae has implemented a new policy that penalizes borrowers who walk away even though they had the ability to pay, or who did not complete a workout arrangement.  Such borrowers now will be ineligible to obtain a Fannie Mae-backed mortgage loan for seven years.  However, borrowers who experience extenuating circumstances may be eligible for a new mortgage loan within two to three years, depending on the situation.

Fannie Mae is also considering legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments.  The company plans to instruct its servicers to monitor delinquent loans facing foreclosure and recommend cases that might warrant the pursuit of deficiency judgments.