Foreclosures are coming to a temporary halt for thousands of American service members.
Freddie Mac instructed its mortgage servicers Friday to delay initiating foreclosure for at least nine months for service members who are released from active duty status through 2011. The move aims to give lenders more time to work with veterans who are struggling to make their mortgage payments.
The foreclosure moratorium applies only to military members whose mortgages are owned by Freddie Mac, a government-sponsored enterprise (GSE) that fuels the secondary mortgage market. The behemoth does not issue loans directly to consumers.
"Our military make sacrifices every day to protect our homes and families," Anthony Renzi, executive vice president of Single Family Portfolio Management at Freddie Mac, said in a news release. "This small act will protect financially troubled service members when they return from active duty by giving them more time to work with their lender to stay in their home."
Under the guidelines, lenders cannot place an eligible service member's loan into foreclosure without the agency's approval. But mortgage servicers can apply a six-percent interest rate cap, which covers the service member's period of active duty and one year after their release.
Veterans and active duty service members who are struggling to pay their mortgage or who anticipate problems on the horizon should contact their mortgage servicer as soon as possible.
The foreclosure stay is one of several mortgage relief avenues available to military members through the Servicemembers Civil Relief Act.
It also comes just weeks after Fannie Mae issued a similar pronouncement.
The mortgage giant in September said it would reduce or suspend mortgage payments for up to six months in cases where the death or injury of a service member created financial hardship. Fannie Mae also plans to suspend credit reporting during that time frame.