Freddie Mac extends foreclosure periods and loan modifications are encouraged!

Freddie Mac made changes today that will effect how Sacramento foreclosures are dealt with as well as loan modifications!

Here is a highlight of those changes:

• The standard foreclosure period for their loans has been extended from 120 - 150 days
  Effective for all foreclosure referrals occurring on or after August 1, 2008, we are standardizing our foreclosure referral time line requirements to provide that Servicers must initiate foreclosure on all Mortgages, including Second Mortgages, Home Improvement Loans (HILs) and previously modified Mortgages, no later than 150 days from the Due Date of Last Paid Installment (DDLPI) (which is the 120^th day of delinquency). Prior to this change, we required Servicers to initiate foreclosure on Second Mortgages/HILs and previously modified Mortgages no later than the 90^th day of delinquency and all other Mortgages no later than the 120^th day of delinquency.
  
  
• New standard foreclosure period extended to 300 days in 21 states (California is one of them)
  In order to provide Borrowers additional time to work with their Servicersto explore alternatives to foreclosure, we are increasing foreclosure time lines in 21 States. This change is effective for foreclosure sales occurring in those States on or after August 1, 2008. With these changes, the foreclosure time lines in these States have been increased to 300 days.
  
  

• Increasing workout compensation and discontinuing foreclosure time line compensation
  The current market environment is placing significant challenges on Servicersas they attempt to work with the increasing numbers of delinquent Borrowers who are struggling to make their Mortgage payments and keep their homes. Freddie Mac is committed to helping these Borrowers pursue alternatives to foreclosure and recognizes the strain that the high volume of delinquent Mortgages is placing on Servicers. Therefore, we are increasing the workout compensation we pay Servicersfor certain successful workouts to compensate them for their extra efforts and to further provide incentives for them to aggressively pursue alternatives to foreclosure with these Borrowers.

• Even if you had a loan modification in the past - you can now qualify for another on
  Effective August 1, 2008, we are also revising the Guide to eliminate the requirement that in order for a Mortgage to be eligible for a loan modification it must not have been previously modified under our loan modification workout option. Servicers will now be able to submit to us a recommendation for approval to modify a previously modified Mortgage, as long as the Mortgage meets the additional eligibility requirements specified in Chapter B65. This revision provides additional opportunities for Borrowers experiencing difficulty in bringing their Mortgage current to pursue a workout loan modification.

So I think this could be great news for folks who want to keep their homes and just can't seem to pull it off with their current terms! I hope that the bonuses offered by Freddie Mac (although they are really just "pocket change") will encourage loan modifications instead of speedy foreclosures and help Sacramento home owners. I just worry about the consequences on the Sacramento real estate market by putting off for many the inevitable (foreclosure).

This Blog By:
Team Newington
Sacramento Mortgage Planners
(916) 687-6868
www.SuperiorLoanteam.com