Fannie Mae, Freddie Mac Put Foreclosures on Hold

22 11 2008

Freddie Mac and Fannie Mae will suspend foreclosures and evictions for owners of occupied homes through the holidays – the latest effort to keep people in their houses.

Mortgage giants Freddie and Fannie, which were seized by the government in September, announced Thursday that they will contact an estimated 16,000 borrowers who are facing foreclosure or evictions between Wednesday and Jan. 9. Those proceedings will be delayed and the homeowners will have a chance to work with mortgage servicers to modify their home loans into affordable payments.

Freddie Mac says it is on track to help three out of five troubled borrowers avoid foreclosure this year. The suspension, “builds on this momentum and provides a new measure of certainty to many of these families during the holidays,” Freddie Mac CEO David Moffett said in a statement.

Last week Freddie and Fannie – which own or guarantee 31 million mortgages, or 58 percent of the nation’s total – announced a streamlined mortgage-modification program, designed to get borrowers closest to foreclosure into affordable monthly payments. Given that the Federal Housing Finance Agency, which oversees Freddie and Fannie, announced this loan-modification program starting Dec. 15, the decision to suspend foreclosures isn’t surprising, says Keith Gumbinger of HSH Associates. “You don’t want to start the program and find people who have missed the cutoff by a day or a week.”

Consumer advocates are encouraged by the action, but note that these steps “will only help a certain number of borrowers,” says Barry Zigas, director of housing policy at the Consumer Federation of America.

Most loans going into foreclosure are held by other investors. “We hope others will take the cue and offer streamlined modification,” Zigas says.

At least one consumer advocate says that Freddie and Fannie should use the self-imposed moratorium to be more proactive in modifying these loans. “It is a nice step. But where does it take us?” asks Ira Rheingold, executive director of the National Association of Consumer Advocates.

Last year, there were 2.2 million foreclosure filings. The Federal Deposit Insurance Corp. estimates that more than 4.4 million borrowers will become delinquent by the end of next year – not including those backed by Freddie and Fannie.

Source: USA Today

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