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On June 24th, Fannie Mae released a stern message with strong ramifications for borrowers who default on Fannie Mae mortgages. The announcement marks a shift from what has previously been a loose laissez-faire policy to a new, comprehensive collection policy. The new policy is strict and is the direct result of the willingness of homeowners to walk away from their mortgage obligations.

With many unemployed homeowners and with many mortgages that exceed appraised values of the homes, a high percentage of Americans are intentionally defaulting on their mortgages and forcing lenders to foreclose. This practice has cost Fannie Mae billions of dollars.

In the announcement Fannie Mae stated, “Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure.”

“Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments.”

The bottom line is that Fannie Mae will now take action to try to collect money lost as a result of walk-away borrowers. The seven-year restriction is severe as the majority of housing loans in the U.S. are backed by Fannie Mae. Previously, homeowners who defaulted could apply for Fannie Mae backed mortgages within three years. Those days are now gone.

The moves by the country’s largest insurer of mortgages is designed to bring underwater homeowners together with lenders to either arrive at loan modifications or in the alternative short sales. Foreclosure is the least desired alternative.

To help the modification process, The Obama Administration has committed billions of dollars in loan reductions and incentive programs for both homeowners and lenders. Originally, lenders were not supportive of modifications because they did not want to accept the losses. What these lenders soon discovered is that the cost of foreclosures far outweighed the relatively minor losses incurred by modifications.