Troubled borrowers who do not try in good faith to work out a deal, but have the capacity to pay, are targeted by new policy by Fannie Mae.
'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,'
A strategic default occurs when a homeowner stops making payments on a mortgage despite being able to do so. It has become increasingly common in communities where housing values fell sharply and homeowners are 'underwater,' or owe more than their houses are worth.
Fannie Mae said that in locations where the law allows, it also plans to take legal action to recoup outstanding mortgage debt from borrowers who strategically default. The company plans to instruct its servicers to monitor delinquent loans facing foreclosure and recommend cases to pursue for such judgments.
In announcing the new policy, Fannie Mae said homeowners who make a good faith effort to resolve their situation with their mortgage services, and those who have extenuating circumstances, will be eligible for new loans in a shorter time period then those that just walk away. The company did not detail how long the wait might be.
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