Fannie Mae, Freddie Mac Foreclosures Take a Holiday

[Nov 21, 2008.]

 

Mortgage finance giants Fannie Mae and Freddie Mac say they'll suspend foreclosures and evictions during the holiday season. The suspension will last from Nov. 26 to Jan. 9.

The move is part of a recently announced plan to restructure mortgages for delinquent borrowers by changing the terms of their loans. People who are three months behind on their mortgages but haven't been foreclosed upon may benefit from this measure.

Fannie and Freddie will work with borrowers to change the terms of their home loans so that more than 38% of their pretax salary doesn't go toward mortgage payments. Under the plan loan terms can be extended up to 40 years and interest rates will be reduced. Payment of part of the loan could also be delayed. Borrowers who qualify for the program will be contacted by Fannie or Freddie.

Three out of five troubled borrowers with Freddie Mac-owned mortgage loans may be helped by these measures. Homeowners must still occupy their homes to be included.

"With this suspension, seriously delinquent borrowers may have an opportunity to avoid foreclosure and work out terms to stay in their homes," James B. Lockhart III, the director of the Federal Housing Finance Agency said in a statement. The agency seized control of Fannie and Freddie back in September.

If you have a Freddie- or Fannie-owned loan and think you might qualify for this plan don't wait until someone contacts you. Time is of the essence so make your move now to straighten out your mortgage mess.

It's hard to say what will happen after the holidays and whether there will be another suspension period for foreclosures. More definitely needs to be done. But at least some finance companies are making an effort to work with borrowers to stem the tide of foreclosures and evictions.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.