Fannie Mae is boosting penalties for strategic defaulters by prohibiting them from getting a mortgage, backed by the company, for seven years from foreclosure date.

Washington-based Fannie Mae (NYSE: FNM) says it will also take legal action to recoup debt and will be instructing servicers to monitor delinquent loans and recommend cases that need deficiency judgments.

In a statement Fannie said policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. “Defaulting borrowers who walk away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure,” the company said in a statement. “Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.”