Freddie Mac Foreclosure Suspension In Gulf Coast Hurricane Disaster Areas Extended Until February 28, 2006
December 2, 2005
Borrowers Urged to Call Servicers Following Dec. 1 End to Mandatory Forbearance
McLean, VA – Freddie Mac is extending through February 28, 2006 its foreclosure suspension on mortgages on homes in Hurricane Katrina and Rita disaster areas and adopting other policies so servicers can continue to extend "the highest level of understanding" to storm victims seeking to extend the mortgage payment suspension period that expires today December 1, says a November 30 policy Bulletin issued by the company. The new Bulletin only applies to Freddie Mac-owned loans on homes in major disaster areas designated by FEMA as qualifying for individual assistance.
The mandatory forbearance and foreclosure suspensions adopted after Hurricanes Katrina and Rita have helped several thousand borrowers cope with the aftermath of the two storms.
To make the post-December 1 extension process more efficient for more borrowers, Freddie Mac is waiving its usual documentation requirements and giving servicers the authority to extend forbearance to all of the borrowers in especially distressed areas, as well as to individual borrowers on a case-by-case basis.
Freddie Mac is also telling servicers not to report hurricane-related delinquencies to credit agencies through February 28 and strongly advising them to forgo collecting penalties or late fees as mortgages are reinstated.
"Our servicers have done an outstanding job helping Gulf Coast borrowers. Today's announcement extends our mortgage relief polices to the borrowers who may need more time to recover their incomes or homes while helping our servicers resume normal business operations," said Freddie Mac Chairman and CEO Richard F. Syron. "Our goal is to move the relief and recovery processes forward in a fair and financially responsible way for borrowers, mortgage servicers, and investors in Freddie Mac mortgage securities."
The new bulletin strongly emphasizes the importance of helping borrowers stay in the their homes after February 28 when the foreclosure suspension is set to expire. If after making every effort to assist a borrower in retaining home ownership, a servicer determines that there is no viable option to foreclosure, the servicer must request Freddie Mac's prior written approval to initiate a foreclosure or to resume a foreclosure action that was interrupted by the mandatory forbearance period, the bulletin says.
"We strongly encourage borrowers now benefiting from the mandatory forbearance policy that expired today to contact their mortgage servicers as soon as possible to discuss next steps," said Patricia Chen, Vice President of Customer Management at Freddie Mac. "We have given our servicers the authority to reduce or suspend mortgage payments on Freddie Mac-owned mortgages for a total of 12 months on a case-by-case basis."
Servicers can also send written recommendations for extending a borrower's forbearance beyond August 2006, which Freddie Mac will consider on a case-by-case basis.
In addition to empowering servicers to provide a wide range of mortgage relief to borrowers affected by the storms, Freddie Mac responded to Hurricanes Katrina and Rita by working with local organizations to provide temporary housing for hundreds of displaced families, joining with the Freddie Mac Foundation to contribute a total of $10 million to organizations supporting storm relief efforts, and building 51 homes with Habitat for Humanity in Washington, DC for delivery to storm struck communities.
Source: Freddie Mac