ATLANTA,None — A new crackdown on people who voluntarily walked away from their mortgages could carry stiff penalties.
The government- controlled mortgage giant Fannie Mae said it's telling loan officers to ban buyers from new home loans for 7 years.
Many are considering walking away because they owe more on their house than it's worth.
Tougher Penalties To Walk Away From Mortgages
The Honeas have lived in their Snellville home 15 years. They have a high interest rate on the loan, so they want to refinance, but because of all the foreclosures around them, they're house has lost value.
Now, the family tells Clark Howard they owe more than their home is worth.
Mary Honea says a mortgage lender told her she had two choices.
"I can stay here, at my current rate, which I can't afford, or move to new home, foreclose on this one, and get a lower interest rate," Honea said.
Marlon Gant of Rex, Georgia is not conflicted. His family has outgrown the 2 bedroom townhouse he bought as a bachelor. Gant also owes more on his mortgage than his home is worth. In February, he stopped paying on his mortgage. He says he's saving for a rental, new furniture and maybe a vacation.
Gant says, "The same way banks are in it for what they can get, taking care of themselves, I think it's time right now for me to look out for myself, and not necessarily look out for the bank."
Real estate columnist John Adams says that's a bad idea "It just strikes me as a selfish decision when you have other choices," Adams said.
Voluntarily walking away from your mortgage is called strategic default.
Adams said defaulting has its dangers because it hurts the bank, but it also hurts your neighbors because your house will be yet another foreclosure.
There are three ways it could hurt you too. First, your credit score will take a huge hit.
Secondly, when your house finally sells, the bank will be out some money. The bank can sue you for the difference between the sale price and what you owed. Fannie Mae has just instructed its loan servicers to do exactly that.
Third, if you refinanced your home and took cash out, the IRS could come after you for taxes.
Marlon Gant's first hope is doing something called a short-sale.
That's what Clark Howard recommends you do if you're in over your head.
In a short sale, your lender works with you and agrees to accept less on the purchase price than what's owed on the home. It saves the bank a fortune compared to foreclosure. Before you just walk away, Clark Howard says, see if a short sale will help you.