Freddie Mac doubles financial incentives to servicers who help borrowers avoid foreclosureMortgagePress.comFreddie Mac, foreclosures, outreach programs
Freddie Mac has informed mortgage servicers that it was doubling
the amount of money it pays for each workout that keeps a
delinquent borrower with a Freddie Mac-owned mortgage out of
foreclosure.
One of the nation's largest investors in residential mortgages,
Freddie Mac also announced it will start reimbursing servicers for
the cost of door-to-door outreach programs, give servicers more
time to negotiate workouts in states with fast foreclosure
processes, and make administrative changes intended to streamline
the workout process.
"We are taking these steps because we want to reinforce the
tremendous importance of workouts and reward their use," said
Freddie Mac Vice President of Servicing and Asset Management Ingrid
Beckles. "Giving our servicers more time and greater compensation
to help troubled borrowers is fundamental to preserving
homeownership and maximizing our efforts to minimize
foreclosures."
Freddie Mac's 0.86 percent single-family delinquency rate is a
fraction of the most recent national single-family delinquency rate
(6.35 percent) calculated by the Mortgage Bankers Association of
America.
According to Beckles, starting Aug. 1, compensation for
repayment plans will rise from $250 to $500 while loan modification
compensation will increase from $400 to $800. For short sales or
pre-foreclosure sales, where Freddie Mac agrees to accept less than
the full amount owed on a borrower's loan, compensation will go
from $1,100 to $2,200. (The higher amount recognizes the greater
servicer staff time involved when negotiating property sales.)
Freddie Mac also said it will now reimburse the cost of leaving
a door hanger up to $15 per mortgage and up to $50 per mortgage for
a door knocking that results in the borrower contacting their
servicer. Freddie Mac will also reimburse servicers up to $200 for
additional fees paid to vendors for door knocking that results in
successful alternatives to foreclosure. This policy is effective
from Aug. 1, 2008, through March 31, 2009.
To qualify for the reimbursement, the servicer must show that
the mortgage was at least 90 days delinquent, the servicer had no
prior contact with the borrower, and that the outreach was done by
an independent third party vendor.
Giving borrowers who call more time in fast foreclosure
states
Freddie Mac also announced it is extending the time for
foreclosures so servicers will have more time, if needed, to
negotiate workouts with delinquent borrowers in Washington, DC, and
20 states with relatively fast foreclosure processes.
In addition to Washington, D.C., the affected 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.
As of Aug. 1, 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 company uses the Servicer
Performance Profiles to measure and reward the quality of a
servicers' investor reporting and default management.
Even though the laws in these states permit a lender to
foreclose in less than 300 days, this announcement means Freddie
Mac will permit its servicers more time to complete foreclosures.
The new policy won't affect borrowers in states where the
foreclosure process already exceeds 300 days.
For more information, visit www.FreddieMac.com.
