Foreclosure, eviction holiday for struggling homeowners

Fannie Mae and Freddie Mac recently issued a notice to its mortgage servicers and foreclosure attorneys directing them to suspend foreclosure sales and evictions on occupied single-family properties from November 26, 2008 until January 9, 2009.

by Broderick Perkins
© 2008 DeadlineNews.Com


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Tens of thousands of homeowners facing foreclosure or eviction just received a holiday reprieve from Fannie Mae and Freddie Mac.

Both agencies recently issued a notice to its mortgage servicers and foreclosure attorneys directing them to suspend foreclosure sales on occupied single-family properties and on evictions from occupied single-family properties.

The stay is on foreclosure and eviction actions scheduled to occur from November 26, 2008 until January 9, 2009.

The temporary action is designed to allow affected borrowers facing foreclosure to retain their homes while Fannie and Freddie implement a streamlined modification program scheduled to launch December 15.



Foreclosure attorneys and loan servicers have been instructed to use the additional time to reach out to borrowers who have defaulted on their loans and continue to pursue workout options. The initiative applies to loans owned or securitized by Fannie Mae and Freddie Mac.

The modification program is aimed at some 16,000 of the highest risk borrowers who have missed three payments or more, owns and occupies the primary residence, and has not filed for bankruptcy.

The program will create a fast-track method for getting troubled borrowers into an affordable monthly payment through a mix of reducing the mortgage interest rate, extending the life of the loan or even deferring payments on part of the principal.

Servicers have flexibility in the approach, but the objective is to create a more affordable payment for borrowers at risk of foreclosure.

The loan modification method of saving homeownership has had widespread appeal, backed by both new federal legislation and mortgage industry efforts to reduce the number of foreclosures.

However, the popularity has spawned questionable and largely unregulated fee-based services claiming to assist homeowners through the esoteric loan modification process. The growth in loan modification services has triggered Federal Bureau of Investigations warnings and investigations.

Homeowners seeking loan modification are advised there are a host of no or low-fee services providing assistance for loan modifications including banks and mortgage lenders, local, state and government agencies as well as non-profit housing, community service and senior citizen agencies.

"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," said Fannie Mae President and Chief Executive Officer Herb Allison.

"Until the streamlined modification program is fully implemented, we felt it was in the best interest of both borrowers and Fannie Mae to take this extra step to ensure that homeowners with the desire and ability to prevent a foreclosure have an opportunity to stay in their homes. 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."

© 2008 DeadlineNews.Com


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also the Silicon Valley Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

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