Fannie Mae to Punish Borrowers Who Strategically Opt to Walk Away from Mortgages
Amidst news that an apparently unprecedented number of mortgage borrowers are opting to walk away from expensive loans on homes whose fair-market value in the devastated real estate market is considerably less than the amount the borrowers owe, Fannie Mae is planning to punish those who opt not to pay loans without good reason.
The government-controlled mortgage giant says it will instruct companies servicing its portfolio of loans to recommend which walk-away homeowners should be pursued for deficiency judgments reflecting the difference between the amount owed and what the abandoned home can be sold for, according to the Los Angeles Times.
Fannie Mae also plans to ban those who opt to walk away from their mortgages from getting new government-backed loans for seven years afterward.
The plan is at odds with efforts by real estate industry lobbyists and others to get mortgage-holders to reduce principal balances of such underwater homes to make them affordable and stabilize the housing market. Otherwise, they argue, the mortgage-holders can lose even more in costly foreclosures.
And the plan is a no-go from the get-go in some states, which bar deficiency judgments from being obtained when a mortgage borrower defaults, notes the Street Sweep blog of Fortune magazine.
