Government mortgage financier Fannie Mae plans to make life harder for so-called strategic defaulters, or those who walk away despite having the capacity to make their mortgage payments.
Those borrowers, along with those who fail to “complete a workout alternative in good faith,” will be ineligible for a Fannie Mae-backed mortgage for seven years from the date of foreclosure.
Of course, none of this will really matter because the long-term viability of Fannie Mae doesn’t look so bright, and there will be plenty of other ways to get a mortgage.
“We’re taking these steps to highlight the importance of working with your servicer,” said Terence Edwards, executive vice president for credit portfolio management, in a press release. “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.”
Fannie also plans to take legal action against borrowers who strategically default in jurisdictions that allow for deficiency judgments.
Next month, the company will instruct its servicers to monitor delinquent loans sailing toward foreclosure and put forth recommendations for cases that warrant the pursuit of recouping outstanding mortgage debt.