Homeowners Who Walkaway Will Feel Pain

Mortgage Lenders, Fannie Mae and Freddie Mac have issued a warning to persons looking to join the growing number of struggling homeowners to "walkaway" from their mortgages.

Guidelines issued by the government backed lenders sent out new guidelines to lenders intended for "walkaways" and other foreclosures situations. Fannie will not allow foreclosed borrowers to avail new mortgage for five years except for "documented extenuating circumstances." In such cases, the ban is for three years, the report added.

The trend which is prevalent in former housing boom markets such as California, Nevada and Florida sees homeowners, who can no longer make payments, cease their mortgage expenditure and months later send the house keys back to their lender.

The trend has been spurred on by websites claiming to be able to cut the hassles of bailing out of a mortgage. Some online companies have even gone so far as to state they could help troubled homeowners improve their FICO scores.

According to Fannie Mae and Freddie Mac, borrowers who foreclose as a result of genuine hardships are likely to be more sympathetic a few years down the road, but those who walk away, will have a hard time getting new home loans for five to seven years.