Industry NewsMortgage

Fannie cracking down on walkaways

'Strategic defaults' can lock buyers out of market for 7 years
Published on Jun 24, 2010

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by CareyBot

Fannie Mae says it will get tough on borrowers who engage in "strategic defaults," or walk away from a home that's worth less than what's owed on the mortgage even if they can afford to keep making their payments.

Economist Mark Zandi of Moody's Analytics has estimated that 9 million homeowners are "underwater" by more than 20 percent, making them more likely to consider a strategic default.

Fannie Mae said Wednesday that it will not only refuse to guarantee another loan for seven years if it has evidence that a borrower chose to default on their loan, and will seek to recoup losses in court through deficiency judgements in states that allow lenders such recourse.

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