Freddie Mac taking measures to prevent more foreclosures
Struggling homeowners in 20 states, including Hawaii, will be granted more time to work out their payment methods
NEW YORK » Freddie Mac is doubling the amount of money it pays loan servicers for each successful mortgage workout among other measures to keep struggling borrowers out of foreclosure, it said yesterday.
The mortgage financier is also giving more time to negotiate workouts in states with fast foreclosure processes and will reimburse servicers for door-to-door outreach.
Freddie will pay $500 for each repayment plan and $800 for each loan modification on Freddie-owned mortgages. Servicers will receive $2,200 for each short sale where Freddie accepts less than the full amount owed on the mortgage.
In some states and Washington, D.C., the government-sponsored entity will give up to 10 months from the due date of the last payment to find sustainable workouts for strapped borrowers. These states allow a lender to foreclose in less than 10 months.
The affected states are 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.
Freddie also will reimburse a servicer up to $15 per mortgage for leaving a door hanger and up to $50 per mortgage for knocking on a door that results in the borrower contacting their servicer. These new policies go into effect today. The outreach reimbursement expires March 31, 2009.