Fannie Mae has announced new loan servicer incentives, designed encourage loan workouts instead of foreclosures.

Here's a link to a PDF of the announcement.

Some highlights:

• A "HomeSaver Advance" loan program, to provide unsecured loans to homeowners as part of a workout
• Increased payments for loan workouts ($700), the unsecured loans described above (up to $700), repayment plans ($400), short sale approvals (from $1000 to $1500), and deeds in lieu of foreclosure ($1000)

The incentives are limited to loans that Fannie Mae has to cover the risk of investor losses for nonperformance.

This is certainly welcome news for struggling owners. The Fannie Mae incentives, along with similar Freddie Mac incentives announced in July, apply to a significant number of home loans. Hopefully, we'll see some improvement in meaningful loan workouts going forward.