Fannie Mae and Freddie Mac have ordered their loan servicers and attorneys not to evict about 16,000 troubled borrowers or sell their homes while they implement a streamlined loan modification program that could save some from foreclosure.
About 10,000 borrowers who have Fannie Mae loans scheduled for foreclosure between Nov. 26 and Jan. 9 will be contacted directly by the attorney handling the case to discuss workout options, the company said. Freddie Mac issued a similar statement pertaining to about 6,000 borrowers.
The temporary suspension of foreclosures is designed to allow borrowers to keep their homes while Fannie and Freddie work with mortgage servicers to implement a streamlined loan modification program scheduled to launch Dec. 15 (see story).
The streamlined modification program is aimed at borrowers who have missed three or more payments on their primary residence and have not filed for bankruptcy. The program could help some obtain a more affordable monthly payment through a mix of reducing the mortgage interest rate, extending the life of the loan, or deferring payments on part of the principal.
Fannie Mae said its loan servicers are also prepared to work with borrowers who have already tried, but failed to obtain workouts. Seriously delinquent loans are being reviewed under the company’s "Second Look" initiative to determine if the borrower has been contacted and all workout options have been exhausted.
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