Fannie Mae & Freddie Mac Suspending Foreclosures

[Professor Shays]

Just Picked this up:


Press Release from Fannie Mae (no link yet): Fannie Mae to Suspend Foreclosures Until January

In order to support the streamlined modification program announced on November 11, 2008, Fannie Mae (NYSE: FNM) today issued a notice to its loan servicing organizations and retained foreclosure attorneys directing them to suspend foreclosure sales on occupied single-family properties as well as the completion of evictions from occupied single-family properties scheduled to occur from November 26, 2008 until January 9, 2009.

The temporary suspension of foreclosures is designed to allow affected borrowers facing foreclosure to retain their homes while Fannie Mae works with mortgage servicers to implement the streamlined modification program scheduled to launch December 15.

Freddie Mac also announced they are suspending foreclosures.

[homerunkevin]

does this mean that people who want to walk away are not stuck from doing so? i wonder what kind of modification will they do? lower principle or lower interest rate?

[Cat Damiano]

FannieMae doesn't offer principle reductions as an option............this is why NACA has such a hard time submitting proposals to them..........

The roadblocks that NACA runs into with FannieMae........

Homeowner’s must be late – Fannie requires the homeowner to be four months late prior to restructuring (i.e. modifying) the mortgage thus requiring them to destroy their credit.

Limited Interest Rate reductions – They will only permanently reduce the interest rate to the market rate, refusing to go lower to make the mortgage payment affordable. This will result in the eventual foreclosure.

No Principal Reductions – Fannie will not reduce the principal, in virtually any circumstance, to make the mortgage payment affordable.

Short-term Solutions – The primary solution has been the HomeSaver Advance (“HSA”) that puts the unpaid arrearage into a second loan. This does nothing to address the underlying unaffordable mortgage. It is deceptive to have the loan appear current when the mortgage payments continue to be unaffordable.

Foreclosure Sales - Fannie requires full documentation to delay a foreclosure sale. This prevents the comprehensive counseling and long-term solutions that may have been possible.

Predatory Practices – Fannie continues to advocate interest only solutions. These IO plans do not provide for long-term affordable homeownership and in fact are equivalent to renting since no equity is created through making the mortgage payments.

NACA states.............
While we continue to get affordable solutions for many at-risk homeowners, we have encountered a serious roadblock due to the refusal of Fannie Mae to support long term affordable solutions

[AZ Meltdown]

No Principal Reductions – Fannie will not reduce the principal, in virtually any circumstance, to make the mortgage payment affordable.

Yet another announcement that will do little to nothing.