Mortgage Giant Changes Policy To Aid Unemployed Homeowners

In an effort to assist unemployed homeowners, Freddie Mac has doubled the length of time that an unemployed borrower's mortgage payments can be reduced or suspended, according to a statement released Friday afternoon by the company.

Freddie Mac has traditionally allowed its servicers -- the mortgage companies hired to handle the day-to-day management of the loans -- to offer reduced or suspended payments to help unemployed borrowers weather financial hardships. But there used to be more red tape.

Previously, anytime a servicer wanted to "forbear" payments, that is suspend or reduce them, beyond three months, the servicer had to ask Freddie Mac for permission.

Now the servicer has the authority to offer such an arrangement without Freddie Mac's approval for as long a period as six months; plus the extension could be up to 12 months (instead of the prior maximum of six) with the agency's approval.

"These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies," said Tracy Mooney, a senior vice president at Freddie Mac. Nearly 10 percent of the company's delinquent loans are in some way related to borrower unemployment issues, according to the company.

Fannie Mae, the other government-owned mortgage giant, said that it intends to implement a similar program, according to Andrew Wilson, a company spokesman.

Freddie's announcement comes just as America's unemployment numbers are starting to improve. Last month, the U.S. economy added 200,000 new jobs, according to the Bureau of Labor Statistics. Additionally, the unemployment rate dropped to 8.5 percent.

"This is a positive development for the large number of people who are unemployed and struggling in the foreclosure process," said Kevin Stein, associate director of the California Reinvestment Coalition, a consumer advocacy organization.

"At the same time, if Freddie really wants to make a difference in the foreclosure crisis, they should offer loan modifications with principal reductions," Stein said. "Or, they should offer yearlong leases for tenants living in foreclosed properties, which is something Fannie Mae happens to be doing and Freddie is not and which would make a big difference in this market."

Comments

[kimberli Wilson]

10:42 PM on 01/20/2012

Why doesn't Fannie and Freddie apply a formula like child support? The formula could incorporate all 4 scenario's. Homeowner (1) has a job (2) Doesn't have a job (3) Can afford to stay if price reduced to fair market value (4) Can't afford to stay no matter what. Can effort to stay with reduction to market value = Principle Reduction. Temporary unemployment ??? = 6 month forbearance and already agree to cash for key amount at the end of 6 months if can't bring payments current. Or if in the worst hit areas trade condo for keys after 6 months. Instead of cash give an already repo'ed condo valued at $50,000 for example, for free. This would work in states like Nev. and Fl.the worst hit states in foreclosures. Realty Trac reported in Jan 2012 in Florida it took an average of 806 days to complete a foreclosure in Florida. If you would cram a loan down $50,000 if they had a job. Why wouldn't you trade a 50,000 condo that has already been repo'ed if they can't make the payment to eliminate the the 806 day wait, it cost the same. They get one property on the market right away and remove one from their inventory. No brainer!

[rt1027]

11:25 PM on 01/22/2012

and yet they don't wish that to occur........so i guess you would like to force it

[kimberli Wilson]

01:45 PM on 01/23/2012

Fannie and Freddie are partly responsible for MERS as they are known owners. The side system for "recording" that destroyed our land records. They are sitting holding the majority of foreclosed property and were taken over by the government in 2008. If the chain of title has a break or if the original note and mortgage are missing or the documents look clearly fake then the formula applys. The bank can't prove they are the owner even though they are receiving the payment monthly and the owner can't prove they have paid off their loan obligation.So, why can't the government make them do whats right and fair. This stale mate is accomplishing nothing and nobody is getting on with their life. Banks should not be able to collect on insurance and keep the property. If you have life insurance, you can't collect the insurance and keep the person that died. Tracking multipile payoffs on the same property has not even been addressed. Yes, force it, based on their inability to do whats right. Lets get this recovery started.

[Kai-HK]

08:15 PM on 01/08/2012

Another mistake by government further prohibiting the real estate market from correcting to its natural floor and adding yet more financial and moral hazard into the market. The government has got to let free market forces to its job and correct prices and stop fighting it, all it does is prolong the economic pain while rewarding those that have made bad decisions and penalizing those that have not.

Kai

[MayorsRevenge]

10:55 AM on 01/08/2012

Keeping people in overpriced houses with overpriced cost of living due to overleveraged commodities markets and centrally planned pricing for everything from tuition to housing to energy by our overlevered government which now spends trillions more than it has every year to the extent that we are on the verge of bankruptcy....

IS NOT HELPING ANY OF US

We need BALANCED BUDGETS
FREE MARKET PRICING
with REAL CONTROLS AND REGULATION and ENFORCEMENT
PROSECUTIONS
and the restoration of civil liberties

NOT

more credit thrown at housing. What's next? Negative interest rates forcing you into debt?!

VOTE THEM ALL OUT in EVERY ELECTION big and small.

[Pam512]

10:16 AM on 01/08/2012

My house is financed through Freddie Mac. I've been unemployed for two years now. The first year (2010), I managed to stay in the house with my unemployment and 401(K) money. When the retirement money ran out, I rented my house out (last January). Unfortunately I rented it to the most worthless human being on the face of the earth. I managed to keep making payments even though the renter wasn't paying me. I finally got her kicked out (not an easy thing to do), and I made the last mortgage payment in June. I tried the forebearance and the loan modification, but obviously you have to live in your house to get any help. I couldn't live in the house because I couldn't afford the utilities. With that being said, I have been told that the house will be auctioned off next month. So Freddie Mac has waited seven months. I think most foreclosed homes right now are due to job loss, not just because the payment is too high. If you don't have a job, you don't have any money. Any payment is too high.

[Collapsing House Price]

04:11 PM on 01/08/2012

Good grief just walk away from the mortgage payments. The house isn't worth it.

[Pam512]

05:06 PM on 01/08/2012

I have walked away. I have really just "divorced" myself emotionally from the house. It just hurts that I put so much money into it not to get anything but a bad credit score out of it. But like everybody keeps telling me, it's not my fault.

[fortressfountain]

09:33 AM on 01/08/2012

The right seems to think everyone is getting a free ride with the banks. Nope, even if people live in the homes for free-they overpaid for the asset and the banks made plenty of the people with their preditory lending fees and charges.
Until the USA can come up with a business model that is not based on debt, debt and more debt-we are done as a country.

[4eva]

11:26 AM on 01/08/2012

We don't have to wait for the USA to come up with a better business model (which I agree is unsustainable). We can right now, today, start saving and pooling our money with others to buy hard assets, without credit or with very little credit so that we can own things outright, not beholden to banks.

Right now, today, people can start to topple the debt money system simply by resolving to only purchase with cash, buy only necessities or things they can barter with for other necessities, learn a trade or craft with which they can barter for services ... and buy hard assets, not stocks, bonds etc.

Another thing people can do if they want to take it a step further is request dollar coins at their bank and use them in day-to-day transactions, preferrably locally for local goods and services.

Refuse to use paper money as much as possible. Paper money is issued by the Federal Reserve. Coins are issues by the U.S. Treasury. There is a difference.

Right now there are billions of dollars in coin dollars sitting in storage. Let's get it out into circulation. Spend it locally.

[Collapsing House Price]

07:50 PM on 01/07/2012

Good grief folks..... just walk away from these inflated mortgage payments and depreciating houses. You're never going to recover financially if you stay and pay.

[justanoldhippie]

08:20 PM on 01/07/2012

That's a dum +b statement.

Being unemployed is NOT equivalent to owning a home which is underwater with a sub prime inflated monthly payment. Duh.

There ARE Americans who had no problem paying their mortgage UNTIL they lost their job AND had exhausted reserves (which would have filled in until they found employment)... due to the depth of this economic depression.

Not everyone who is having trouble paying their mortgage had a sub prime loan, or got into a home mortgage that they couldn't afford.

If being allowed to "fall behind" even two months without having your stuff thrown out onto the street is enough "help" to keep a family in place, especially now that hiring is picking up, then that is a great thing to offer every day Americans.

What is wrong with you?

Part of the "problem" with the home mortgage industry (before the crash) is that there were a segment of gamblers who turned both the residential lending aspect of it into a casino and/or others who bought homes on speculation with the goal to sell them a year later at 50% profit.

We also do not believe that those gamblers/speculators whose "bet" didn't pay off [in 2008] should be allowed to "just walk away" ... sorry.

What happened to the idea that you pay your debts in America? Wow.

[Collapsing House Price]

08:49 PM on 01/07/2012

You must work for the banks.

Why do you want to continue enslaving the middle class and enriching the banks?

[novictim]

10:09 PM on 01/07/2012

What's wrong with YOU?

We have been swindled for the past 30years ...wages declining and wealth concentrating to a greedy few. Our national debt fueled by tax breaks to the 1%...leaving nothing endless pain for our children to pay off.

Why would you not walk away from a crippling loss on your home loan--how are you responsibe for the inflated home pricing of the past decade?-- why would you add insult to injury?

[Kritikos]

07:31 PM on 01/07/2012

http://www.youtube.com/watch?v=Z9nwcpGZE6A ...................That's what I said.

[Mary Blickhahn]

07:21 PM on 01/07/2012

OK here is a thought...bring in some nice paying jobs and a lot of this goes away...OR collapse the housing market, give people cash who have earned it by being current or having the house paid off. And just give these worthless falling down homes to those ambitious enough to stay and fix them up! Offer a deal that resembles the ones used to settle the west. Require a certain amount of improvement in dollar amount to determine their eligibility for the home. We have used incredible resourceful and innovative solutions to solve much larger problems then this. Lets quit letting a bunch of unimaginative, selfish, and greedy people make the decisions for this nation....Quit electing them and for GOd sakes lets find a way to run them out of business!

[LeftMyArmInIraq]

08:10 PM on 01/07/2012

I agree with you Mary , When I got home from over there the plant I worked for 3 years at was sold to some company in Germany . The person bought this plant in 2010 and sold it 12/2011 . He promise that the plant was going to get a make over before I left . Thank You for the make over Mr Mitt Rodmney ,
I was one of the lucky ones that the bank helped , but there was over 71 families that I know of very well that worked at the plant and 63 of 71 families lost their HOMES .

[Mary Blickhahn]

06:39 PM on 01/08/2012

Thank you for your service! My husband served in Iraq with the army. I am glad you were able to get some help and stay in your home. My hubby worked for a city garage and many fully employed city workers lost their homes due to pay cuts and the inflating cost of living squeezed them out of their homes. Then add all the ones laid off like my hubby. They too lost their homes as we did...this is far too much to let it keep happening!

[Tim The Enchanter]

06:49 PM on 01/07/2012

"Hey, you, yeah, you, homeless guy. We've got GREAT news for you".

[Tim The Enchanter]

06:47 PM on 01/07/2012

Too little, too late.

[AlanBannacheck]

06:44 PM on 01/07/2012

Seems fair to me,

[Aj Beamish]

06:13 PM on 01/07/2012

I can see all the compassionate conservatives are out in full force showing their "compassion" on this forum...

[Tim The Enchanter]

06:47 PM on 01/07/2012

If it weren't for the FM twins, people wouldn't be losing their homes inthe first place.

[laser focused]

12:46 PM on 01/08/2012

...as long as they can fool people into thinking their intentions are good. smart people are on to Dims

[jshook99]

06:00 PM on 01/07/2012

Then if i make minimum wage and I bought a house way above my income, they will let me slide?
It will not be long and if Obama has his way the Government/aka Obama will own your house and let you live in it for a fee. SOCIALIST/DICTATOR

[Opinionated Lady]

06:28 PM on 01/07/2012

If you bought a house and you couldn't afford the payments at the time, something was wrong with the underwriting. Lenders and brokers who originated Liar's Loans that were backed by the government ought to be scrutinized for violating the rules.

[Collapsing House Price]

06:32 PM on 01/07/2012

Or someone falsified information on their mortgage app. ;)

[jshook99]

08:16 PM on 01/07/2012

The Government made banks give these loans.

[Mary Blickhahn]

07:26 PM on 01/07/2012

OH come on..really??? You are only repeating misinformed sound bites and slander. Here is a news flash, real people with small children have been tossed to the street and left homeless, jobless, and alone. Real people, not sound bites! Honest to god real people, who breath and bleed. To not realize real people are being harmed by this, is simply cruel on your part and irresponsible.

[xpt2wndj]

10:00 AM on 01/08/2012

You can thank Freddie and fannie and liberal government housing policies.

[jshook99]

01:52 PM on 01/08/2012

And the Government forcing banks to give loans to those who could not pay the note and those who bought knowing they could notpay the noted is irresponsible.

[breakingpoint]

04:37 PM on 01/07/2012

some of the fees are $15,000
yes fifteen-thousand
guess who get's a huge chunk of those fees?

[pepper1311]

04:33 PM on 01/07/2012

When do I get my thank you note from dead beat borrowers. I once for a tax increase, but now NO way, this how our money is spent.

[Aj Beamish]

06:12 PM on 01/07/2012

I send you a thank you note when you take a basic grammar course and pass.

[Tim The Enchanter]

06:48 PM on 01/07/2012

I assume you mean "I WILL send".

[DUSAA-1775]

07:40 PM on 01/07/2012

This is a classic example of why I try to avoid being snotty about other peoples sentence structure.

[LeftMyArmInIraq]

07:22 PM on 01/07/2012

I did a couple of tours over there , do you think we got a thank you note .Go ask Bush , who went hiding in the hills and your buddy SHITNNEY is trying to shoot someone else in the face . And before you call AMERICANS dead beat look REALLY HARD IN THE MIRROR

[pepper1311]

08:01 PM on 01/07/2012

Cry me a river. Your a POG and want something. Get on with life and do something. If your were in the military you should have disabling to do something on your own. Me? VN 12/66-7/69 1st Matines northern I-corp, lost left arm and kidney. I bought investment properties in the 1970's and still rent them. ( no mortgages) also hav been farming almost entire life ( excep military and naval hospital year) no mortgage. So WTF are you doing?