Sweeping Foreclosure Changes at Fannie Mae, Freddie Mac
Mortgage giants Fannie Mae and Freddie Mac announced a number of new policy changes this week. These changes could potentially prevent foreclosure for more homeowners than the recent foreclosure bill that has garnered so much press attention.
Among the changes at Freddie:
Servicers will no longer be paid more money to foreclosure quickly (how ya like that one?).
Most people were unaware that both Freddie and Fannie paid servicers based on how quickly they completed foreclosure actions.
They’ve also doubled the fees that they’re paying the servicers to obtain a workout. Please note here that workout does NOT necessarily mean that the borrower gets to keep the home. They may avoid foreclosure while losing the home.
Interestingly, they’re still paying the servicers the most amount of money for short sales… at what point is someone going to point out the conflict of interest here? Quite frankly, modifications are nearly as time-consuming as short sales, yet the potential payoff to the servicer is 2.75 times higher when the homeowner gives up the home.
And for all the mentions of “deed in lieu of foreclosure” in the mainstream media’s “Tips to Avoid Foreclosure” articles, servicers only get paid $250 when they arrange them.
Is is any wonder why a deed in lieu of foreclosure is one of the least-used tools in most loss mitigation departments?
They’ve also extended foreclosure timelines to 300 hundred days in 21 states.
That means you can be 300 days late on your payment, and still possibly stop foreclosure on your home.
Given that Fannie and Freddie have basically gotten a blank check from the federal government, they can certainly afford to accommodate these changes.
However, waiting that long to fix your foreclosure leaves you a really big problem to solve.
Generally speaking, the sooner you’re able to start working on a foreclosure solution, the easier it is on you.
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