Fannie Mae Stops Foreclosures Temporarily
Posted: Friday, December 26, 2008
by Rich Johnson
The Johnson Team
In all the discussion and dissension over the $700 billion government bailout intended to stop the downward slide of the economy, it is encouraging to finally hear of some plans to help the " Main Street " we keep hearing about. Since this is where the problems started, it seems reasonable that it may have a place in the recovery.
On November 11, Fannie Mae and Freddie Mac announced a program to help homeowners in default on a loan held by the two entities modify the terms of their loan to possibly forestall a foreclosure. Today, November 20, Fannie Mae went one step further and announced a halt to foreclosures scheduled for November 26, 2008 through January 9, 2009. There are some limitations. It applies to
Foreclosures scheduled for sale from November 26, 2008 through January 9, 2009
Single family properties only
Occupied properties only
The purpose of this temporary halt is to allow time to institute the loan modification program announced November 11, which will begin on December 15. That program provides for the following potential options for those mortgages currently in default:
Repayment Plan: paying off the delinquent amount over time to bring the loan current
Fannie Mae's HomeSaver Advance: paying off the delinquent amount with an unsecured loan
Modifying the Existing Loan: changing the terms of the loan to pay off the delinquent amount and/or lower the monthly payments
Pre-foreclosure sale: agreeing to sell the property for less than the loan amount (typically a short sale)
Deed in Lieu of Foreclosure: lender accepting a deed to the property from the borrower and cancelling the debt
Borrowers covered under this procedure should be receiving a letter from the foreclosure attorney or trustee handling their file. That letter will tell the borrower to contact their loan servicer (the company to whom they make their payments), to discuss alternatives to foreclosure.
While Fannie Mae & Freddie Mac hold or guarantee the majority of the home loans in the US , that leaves a lot that are held by individual lenders. This program does not apply to them, but you may find that they are actually more flexible. To qualify for the Fannie Mae/Freddie Mac program, the borrower must be in default. Chase and Washington Mutual ( www.wamu.com/wamucares ) are working with borrowers who are still current on their payments but can provide evidence of hardship, and there may well be other lender/servicers who are doing so.
The bottom line is that anyone who is behind on their mortgage payments or thinks they are going to get behind on their mortgage payments should get on the phone to their servicer (the place they make their payment) sooner rather than later. While Congress and the federal Administration are trying to figure out where to spend that $700 billion, some lenders are trying to solve the problem where it started.
Lylene & I have been licensed Realtors for 20 years. We have been married for 40 years & have had many lives wearing many different hats to include Corporate Manager, Middle School Teacher, Grocer, Baker, Contractor & finally for the last 20 years Realtor.
View us the web Johnson Team Real Estate in Bellingham Washington or read our blog at View us the web Johnson Team Real Estate Bellingham Blog
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Top-level comments on this article: (1 total)Very informative but as most of us understand you must be in foreclosure already. Secondly it does not help anyone avoid foreclosure. Thirdly the party must be credit worthy and able to prove income a fact many juts no longer can do. As far as payback past due, the plans work the same as credit card debt with no real ability for people in financial trouble or with l9imited means to be able to respond. In fact one would have to write another article to address those issues and all the oterhs associated with this fiasco.I agree with your assessment of this program, with one exception. A short sale, which is one of the options provided by Fannie Mae, does prevent foreclosure. It is not wonderful, in that the homeowner still loses their home, but it does lessen the long term sting. The negative impact of a short sale on one's credit score is significantly less than the impact of a foreclosure, and now that so many aspects of our lives are affected by our credit score, that can be a significant benefit.I think the most important paragraph of the article is the one suggesting that anyone who thinks they may have to miss a payment should contact their loan servicer immediately. Lenders are making changes to loans that do allow homeowners to keep their homes, avoiding foreclosure and the subsequent credit issues.Your also right on that one IF the bank or lender accepts the offer, many simply won't. In fact even with interest at very low rates no help. That is why so many are walking away and going elsewhere. As for credit, in these cases it is already most likely ruined. If you go bankrupt you suffer for 12 years, wal;king away 4. you take the pick as a business person. Take someone to court? Placxe a lien on what? Zero from zero is still zero. yet there are some out there that may be helped and they should take your advice. Thanks.Threre is no silver bullet in the process. Some homeowners will be foreclosed on others will not. This is absolutely a moving taqrget in our industry with everyone looking for answers Ben Bernanke & Henry Paulson included. It's important for those involved to stay informed so they can make the bestr decisions for their Families.
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