|Delinquent borrowers on conforming mortgages were given an early gift for the holidays.
Fannie Mae and Freddie Mac -- operating under the conservatorship of the Federal Housing Finance Agency -- announced separately today that all foreclosures and evictions on loans owned or securitized by either government-sponsored enterprise would be suspended until Jan. 9, 2009. The moratorium applies to foreclosures and evictions scheduled to occur between Nov. 26, 2008, and Jan. 9, 2009.
The move was taken to support the streamlined modification program announced on Nov. 11. That program, which takes effect on Dec. 15, will enable modifications to the interest rate, remaining term or principal balance for owner-occupied borrowers in order to bring their housing payment ratio to 38 percent of gross household income.
"With this suspension, seriously delinquent borrowers may have an opportunity to avoid foreclosure and work out terms to stay in their homes," FHFA Director James B. Lockhart said in an announcement.
Qualified borrowers are at least three months past due, occupy the subject properties and have not filed for bankruptcy.
"The streamlined modification program by Fannie Mae, Freddie Mac, Hope Now and 27 mortgage servicers is an important step forward in addressing the systemic issues driving the increase in foreclosures," Fannie Mae President and Chief Executive Officer Herb Allison said in a press release. "We encourage other servicers of non-GSE mortgages to participate in the streamlined modification program to bolster our collective efforts to stem the foreclosure crisis."
Fannie expects its "Second Look" initiative to impact 10,000 borrowers.
In its own statement, Freddie said around 6,000 of borrowers on two- to four-unit mortgages it guarantees are expected to be impacted. The secondary lender expects to approve 84,000 workouts this year for an estimated 140,000 borrowers who are delinquent on loans it owns.
The McLean, Va.-based company said vacant single-family properties are ineligible.
"Freddie Mac is on track to help three out of every five troubled borrowers with Freddie Mac-owned loans avoid foreclosure this year," CEO David M. Moffett said in the statement.
|Streamlined Mods for Conforming Loans
Seriously delinquent mortgages under the management of Fannie Mae or Freddie Mac may qualify for modifications to the interest rate, remaining term or principal balance under a program unveiled today by federal regulators.