Fannie Mae today announced plans to bar you from getting a mortgage for seven years, if you walked away away from a house (let it foreclose) when you had the capacity to pay or did not complete a workout alternative in good faith.

Also, they announced that they will also take legal action to recover the balance of the outstanding mortgage debt, in jurisdictions that allow the taking of deficiency judgments (which includes Texas!). This is not good, if you decide to "walk-away" from your house, because it is upside down, or because it is a predatory loan. They could sell the house at foreclosure, and come after you for the difference, which could be many thousands of dollars.

Of course they can do that now in Texas, but in my experience, very few (at least first mortgage) mortgage lenders, if any, sue the borrowers that walk on their houses. However, if the first mortgage forecloses, that cuts off any second mortgages, and I have had clients telling me that the second mortgages are turning the debts over to collection agencies for collection. It won't be long (if they aren't already) turning the defaulted second mortgages over to attorneys for suit. To avoid a suit, complete a workout alternative, or file bankruptcy.

A Chapter 7 bankruptcy, if you qualify, can completely discharge or cancel a mortgage deficiency balance. Or if you file a Chapter 13 bankruptcy, depending on your income, you can qualify part or most of the deficiency, while paying it only what you can afford. If you live in the Houston Texas metropolitan area, I offer a free consultation for people considering filing a bankruptcy case. Just call my office at 713-772-8037 during working hours for an appointment with me. 

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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