It looks like a Short Sale is about to become much, much better than simply walking away from your home. Fannie Mae is ready to start penalizing home owners who use “strategic defaults” (read “walk away”) for up to 7 years.
From the Wall Street Journal:
Fannie Set to Penalize Defaulters
Fannie Mae said Wednesday it would “lock out” borrowers from getting a new loan for seven years if they default on a mortgage they could afford to pay.
The move represents the latest effort by the mortgage industry to prevent a new wave of losses that could result if more borrowers who can afford their monthly payments instead opt to “strategically” default on loans, because they owe far more than their homes are worth.
“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, Fannie’s executive vice president for credit portfolio management.
Read the entire article.