Exciting news if you have a Fannie Mae or Freddie Mac insured loan. With the upcoming changes, you may be able to walk away from a home that is underwater without owing a deficiency to the mortgage company and without going into foreclosure.
This change gives the homeowner the option to deed the property back to the creditor to avoid foreclosure and walk away from the property. The “deed in lieu of foreclosure” has always been an option but traditionally the mortgage company would try to collect the remaining balance owed on the home from the homeowner. The change is that now, it appears, they may be writing off the deficiency owed and not trying to collect from the homeowner. Even more good news is that the government has extended tax-free status to the forgiveness of the loan, however, currently, that law is set to expire at the end of 2013.