Freddie Mac has announced that it is giving mortgage servicers expanded authority to provide six months of forbearance to unemployed borrowers without Freddie Mac's prior approval and up to an additional six months with prior approval. This means unemployed borrowers may be eligible for up to 12 months of forbearance. Freddie Mac's forbearance options are being expanded at the direction of its conservator, the Federal Housing Finance Agency (FHFA), and will take effect on Feb. 1, 2012. According to the latest statistics, nearly 10 percent of delinquencies on Freddie Mac mortgages were tied to unemployment.
"These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies," said Tracy Mooney, SVP of single-family servicing and REO for Freddie Mac. "We believe this will put more families back on track to successful long-term homeownership."
Delinquent borrowers in an existing short-term forbearance plan can be evaluated for an extended forbearance under Freddie Mac's new policy. Previously, Freddie Mac allowed servicers to grant up to three months of forbearance with no payment and without prior approval, or six months at a reduced payment with prior approval. Longer forbearance required prior approval and was generally restricted to events such as natural disasters, permanent disability or long-term medical emergencies.