Freddie Mac is doubling the fees it pays to save mortgages from foreclosure.
The McLean, Va.-based company announced today it will begin paying the higher fees on Aug. 1.
Servicers that successfully negotiate a repayment plan will see their fees increase to $500 from $250. Fees for loan modifications will rise to $800 from $400, while short-sale payments will be pushed up to $2,200 from $1,100.
In addition, from Aug. 1, 2008, until March 31, 2009, Freddie said it will start reimbursing servicers for the cost of door-to-door outreach programs. The reimbursements apply on loans delinquent at least 90 days where the servicer had no prior contact with the borrower and the outreach was done by an independent third-party vendor.
The secondary lender will reimburse the cost of leaving a door hanger up to $15 per loan and up to $50 per mortgage for a door knocking when a borrower ends up contacting their servicer. Servicers will be reimbursed up to $200 for additional fees paid to vendors for door knockings that result in successful foreclosure alternatives.
Freddie also noted it will give servicers more time to negotiate workouts in states where the foreclosure process is faster. Those states include Alabama, Alaska, Arizona, Arkansas, California, Georgia, Hawaii, Maryland, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, North Carolina, Rhode Island, Tennessee, Texas, Virginia, West Virginia and Wyoming. Washington, D.C., is also among the areas to receive extended time.
"Specifically, starting Aug. 1, 2008, servicers are allowed up to 300 days (10 months) from the due date of the last payment to the foreclosure sale in these states to seek aggressive and sustainable workout solutions for the borrowers and still meet the standards set in Freddie Mac's servicer performance profiles," the statement said. "The company uses the servicer performance profiles to measure and reward the quality of a servicers' investor reporting and default management."
The government-sponsored housing enterprise said it will also make administrative changes to help streamline the workout process.
Freddie, which reported that serious delinquency of at least 90 days was 0.86 percent as of May 31 -- the highest it has been since February 2004, emphasized that its delinquency rate was far better that the national delinquency rate. The Mortgage Bankers Association reported 90-day U.S. mortgage delinquency at 1.56 percent as of March 31.