"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio
management. "Walking away from a mortgage is bad for borrowers and bad
for communities and our approach is meant to deter the disturbing trend
toward strategic defaulting. On the flip side, borrowers facing
hardship who make a good faith effort to resolve their situation with
their servicer will preserve the option to be considered for a future
Fannie Mae loan in a shorter period of time."

Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in
jurisdictions that allow for deficiency judgments. In an announcement
next month, the company will be instructing its servicers to monitor
delinquent loans facing foreclosure and put forth recommendations for
cases that warrant the pursuit of deficiency judgments.

Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for
foreclosure alternatives, such as a loan modification, a short sale, or
a deed-in-lieu of foreclosure. A borrower with extenuating
circumstances who works out one of these options with their servicer
could be eligible for a new mortgage loan in three years and in as
little as two years depending on the circumstances. These policy
changes were announced in April, in Fannie Mae's Selling Guide Announcement SEL-2010-05.