Freddie Mac Extends Forbearance To Unemployed Borrowers Up To 12 Months

Freddie Mac Extends Forbearance To Unemployed Borrowers Up To 12 Months

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Freddie Mac does not make loans directly to homebuyers. Freddie Mac primary business is to purchase loans from lenders to replenish their supply of funds so that they can make more mortgage loans to other borrowers.

According to PRNewswire on 01/06/2012 Freddie Mac announced it is giving mortgage servicers expanded authority to provide six months of forbearance to unemployed borrowers without Freddie Mac's prior approval and up to an additional six months with prior approval. This means unemployed borrowers may be eligible for up to 12 months of forbearance. Freddie Mac's forbearance options are being expanded at the direction of the Federal Housing Finance Agency and will take effect on February 1, 2012.

News Facts:

• Mortgage servicers can now approve unemployed borrowers with Freddie Mac owned- or guaranteed-loans for six months of forbearance without prior approval from Freddie Mac.
• Servicers can extend the forbearance period up to an additional six months with prior Freddie Mac approval, giving eligible unemployed borrowers with Freddie Mac owned- or guaranteed-mortgages up to one year of forbearance.
• The expanded forbearance options will take effect on February 1, 2012.
• Delinquent borrowers in an existing short term forbearance plan can be evaluated for an extended forbearance under the new policy.
• Previously Freddie Mac allowed servicers to grant up to three months of forbearance with no payment and without prior approval, or six months at a reduced payment with prior approval. Longer forbearance required prior approval and was generally restricted to events such as natural disasters, permanent disability or long-term medical emergencies.
• According to the latest statistics, nearly 10 percent of delinquencies on Freddie Mac mortgages were tied to unemployment.

“These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies.,” said Tracy Mooney, SVP of single-family servicing and REO at Freddie Mac