Freddie Mac to Double Incentives To Servicers to Avoid Foreclosures
Real Estate News From the We Buy Houses Team
Freddie Mac, which has been stung by surging delinquencies, will double the financial incentives it offers to mortgage servicers that help borrowers with Freddie-owned loans avoid foreclosure.
The mortgage giant has struggled in recent months as federal officials have sought to reassure investors about its financial health and pressure mounts to raise fresh capital to offset the tumbling values of home loans it holds. Freddie shares are off 75% year-to-date and recently traded down 12 cents at $8.61.
Beginning Friday, compensation for repayment plans will jump to $500 from $250, while loan modification compensation will also double to $800. For preforeclosure sales, under which Freddie Mac accepts less than the full amount owed on a borrower’s loan, compensation will increase to $2,200, up $1,000.
Freddie Mac, one of the largest investors in residential mortgages in the U.S., will also extend the time for foreclosures, so servicers will have more time to negotiate workouts with delinquent borrowers in Washington, D.C., and 20 states with relatively fast foreclosure processes. Servicers will be given up to 10 months from the due date of the last payment to the foreclosure sale.
“Giving our servicers more time and greater compensation to help troubled borrowers is fundamental to preserving homeownership and maximizing our efforts to minimize foreclosures,” Vice President of Servicing and Asset Management Ingrid Beckles said.
The slumping stock prices of Freddie and fellow mortgage giant Fannie Mae have set off a raging debate on Wall Street over whether the companies, which are crucial to the battered housing market, will need a big cash infusion and possibly government help.