Mortgage giant Fannie Mae announced plans this week to institute a new rule penalizing homeowners who walk away from their mortgages. If homeowners are able to afford home payments, Fannie Mae says they will pursue them in court and restrict their access to future home loans for seven years. The decision will affect many home-owning Americans since the mortgage market is nearly completely controlled by Fannie Mae, and its sister company Freddie Mac, as well as the Federal Housing Administration.
We ask Louise Story, finance reporter for our partner The New York Times, to explain the significance of the rule. To better understand the implications for the homeowner, we talk wtih Jeff Horton, who decided to walk away from two properties he owns in Orlando, Florida. He says he can afford is mortgage, but it's not worth it for him to stay in his home if he can rent a cheaper property.