Yesterday, Fannie Mae announced that it was temporarily suspending foreclosures and evictions which have been scheduled to take place from November 26, 2008 until January 9, 2009. This temporary halt is designed to allow time for positive actions to reduce the growing number of foreclosures presently taking place in the U.S. It will allow affected borrowers to retain their homes while Fannie Mae works with the Federal Housing Finance Agency (FHFA) and others to finalize and implement a new program for modifying mortgage loans, which was first announced on November 11, 2008 and is slated to take effect on December 15. This new program applies to loans owned or securitized by Fannie Mae.
In case you missed the news release on the 11th , it came from the Federal Housing Finance Agency Director, James Lockhart who said the following:“Today we are announcing a major program designed to greatly reduce preventable foreclosures with a simplified, streamlined loan modification program to get struggling homeowners into mortgages that they can afford”. To read in its entirety, see November 11th FHFA News Release.
The action just announced yesterday to suspend temporarily foreclosures and evictions is in direct support of that policy initiative. It is aimed at helping the highest risk borrowers who have missed at least three payments on the property they own and still occupy as their principal residence, and who haven’t filed for bankruptcy. The temporary halt will allow Fannie Mae time to work with mortgage servicers to create a more affordable payment for these borrowers to keep them in their homes. It will allow time to all organizations participating in this mortgage loan modification program to work out the details as to how it will be implemented.
“The program creates a fast-track method for getting troubled borrowers into an affordable monthly payment through a mix of reducing the mortgage interest rate, extending the life of the loan or even deferring payments on part of the principal” if they are still in their homes. However, if a property is unoccupied, the foreclosure sale will go forward, according to the press release. Here is that Fannie Mae Press Release in its entirety.
Who knows? These combined actions might be an important first step in slowing down the number of foreclosures nationwide, and in keeping more people in their homes. We’ll watch to see what happens in the near future; at least for now you are informed.