Breaking a mirror is said to cause seven years bad luck. If that is the case, then what happens if you walk away from your Atlanta real estate loan? Defaulting on your home loan can mean seven years before you can obtain a new one. If your mortgage is underwater and you are thinking about walking away from your Fannie Mae mortgage, don’t expect to get another one for seven years.
Fannie Mae has announced a new policy designed to encourage homeowners who have the means to make mortgage payments to seek other alternatives before deciding on foreclosure. Alternatives to foreclosure include loan modification, short sale or deed-in-lieu of foreclosure.
According to Fannie Mae, “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.”
“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,” said Terence Edwards, executive vice president for credit portfolio management.
Fannie Mae announced it will take legal action to get back the outstanding debt from borrowers who strategically default, which occurs when a homeowner stops making mortgage payments despite being able to.
Strategic defaults are becoming more common since so many homeowners are upside down, which means they owe more on their mortgage than their house is worth. People are simply mailing the keys to their house back to the mortgage company or bank.
Make sure that you explore other options before you mail in your keys and cause seven years bad luck, or a least a seven year wait before you can buy again.