Holiday Gift for Some Distressed Homeowners

Some homeowners fearing a foreclosure notice during the holidays are getting an early gift from Fannie Mae and Freddie Mac. The two government sponsored enterprises (GSEs) announced they will suspend evictions and foreclosures on over 15,000 properties until January 9^th.

One reason for the delay is because Fannie and Freddie, now under government control, is implementing a new loan modification program. In this program, the two mortgage companies will modify the terms on possibly hundreds of thousands of mortgages that are >90 days past due. Although the two GSEs hold a small percentage of the delinquent loans in the US, government officials hope that other lenders and servicers will follow the example.

"We encourage other servicers of non-GSE mortgages to participate in the streamlined modification program to bolster our collective efforts to stem the foreclosure crisis," Fannie Mae President and Chief Executive Herb Allison said in a statement. Until recently, troubled loans were handled on a case by case basis, a costly and time-consuming process. But as home prices continue to decline the cost of foreclosure to lenders is climbing.

For example, Freddie Mac is current trying to find buyers for over 28,000 foreclosed homes as of the last quarter, up from under 12,000 a year ago. Furthermore, the gross proceeds from the sale of fore closed homes were nearly 30% less than the unpaid balance of loan in the third quarter. This 30% loss doesn't even take into account other costs such as repairs, real estate agent commissions and closing fees.

The situation at Fannie Mae is equally bleak, with an inventor of more than 67,000 single family homes at the end of the third quarter. This is a drastic increase from the under 34,000 foreclosed homes they had at the end of 2007. Net proceeds at Fannie Mae also fell to an average of 70% of the loan balance from 78% in 2007.

The temporary suspension in foreclosure will apply to 10,000 Fannie Mae held loans and 6,000 Freddie Mac owned mortgages. Properties will range from single family to four-unit properties that were set to sell in foreclosure between the end of November and January 9^th of 2009. At the very least it will help homeowners by giving them a place to stay over the holidays and hopefully longer if the loan modification program works.

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Roland Carrillo, PhD
Branch Manager
VanDyk Mortgage in Cary, NC
Email: rjcarrillo@gmail.com
Website: http://www.mymortgageanalysis.com/

Our branch specializes in affordable lending options including FHA / VA and the Community Heros program. As both a banker and a broker, you have access to a full menu of products including all Fannie Mae and Freddie Mac Conforming loans, Reverse, Jumbo and Commercial financing on a variety of property types. We are located in Cary, North Carolina and are within easy reach of the entire RTP Area including Wake, Durham and Orange Counties.