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  • Forbearance Terms Eased for Freddie's Borrowers

    Monday, January 09, 2012   /   by Justin Hoffmann

    Forbearance Terms Eased for Freddie's Borrowers

    Freddie Mac gave unemployed homeowners who are struggling to pay mortgages owned or guaranteed by the company a break on Friday when it eased its temporary forbearance restrictions. Effective February 1, Freddie Mac servicers will no longer need prior approval from the government sponsored enterprise (GSE) before extending forbearance of up to six month's duration to its borrowers who have lost their jobs. Servicers can also seek preapproval for a second six month period of forbearance for those borrowers if needed.

    According to PRNewswire, the authorization to servicers came at the direction of the Federal Housing Finance Agency (FHFA) which acts as conservator for both Freddie Mac and Fannie Mae so it is reasonable to expect a similar announcement from the other GSE, perhaps today. The same source said that latest statistics tie almost 10 percent of Freddie Mac's delinquencies to unemployment.

    Prior to this announcement Freddie Mac had permitted its servicers to authorize non-payment forbearance for three months without preapproval or for six months at a reduced payment with prior approval. Anything longer term required prior approval and was generally restricted to events such as natural disasters, permanent disability, or long-term medical emergencies.

    According to information released by Freddie Mac, delinquent borrowers who are already in a short-term forbearance plan can be evaluated for an extended plan under the new policy.

    Tracy Mooney, Senior Vice President, Single-Family Servicing and REO, Freddie Mac said, "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. We believe this will put more families back on track to successful long-term homeownership."

    By Jann Swanson

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