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Fannie and Freddie Should Further Extend Time Suspensions on Foreclosures

It will help troubled homeowners and our USA economy in general if Fannie Mae and Freddie Mac extend even further their time and suspension of foreclosures.

What good does it do to kick people out of their homes and move forward with increasing foreclosures when the real estate market is in the process of absorbing the distressed properties we now have?

If a home loan borrower is in trouble .. either from evaporated equity or from resetting interest rates on ARM loans ... Fannie and Freddie should suspend foreclosure one month at a time ... as long as somebody verifies that these folks are trying in good faith to make their payments and are working with the lender for modification of rate and terms.

We need Fannie and Freddie ... and major financial investors ... to continue to provide capital for mortgage financing. It's not helpful for homeowners and our economy if Fannie and Freddie pursue foreclosure and kick people out of their homes.

Fannie Mae and Freddie Mac ... Established by Congress to provide liquidity, stability and affordability to the nation's residential mortgage markets. Fannie and Freddie were taken over by the US government during 2008 and should support communities and provide mortgage capital to lenders.

Freddie announced on January 8 that it's extending its suspension of all foreclosure sales and evictions involving occupied single family and 2-4 unit properties with Freddie Mac-owned mortgages through January 31, 2009. That's good. (The suspension does not apply to vacant single family properties).

Freddie says that it wants to reduce foreclosures and accelerate the return of stability to the U.S. housing market and intends to provide servicers with more time to help troubled borrowers find an alternative to foreclosure and implement the Streamlined Modification Program that went into operation on December 15, 2008.

The Federal Housing Finance Agency (FHFA), HOPE Now and 27 mortgage servicers, set up the Streamlined Modification Program to expedite loan modifications for eligible borrowers who have missed three or more mortgage payments.

But Will This Be In Time For Troubled Home Borrowers?

Freddie said that it gives lenders servicing its mortgages some authority to help troubled borrowers before they miss a payment through forbearance and that they provide permanent rate reductions, mortgage term extensions or other modifications to borrowers who are already delinquent.

Let's encourage Freddie and Fannie to continue help for troubled homeowners and borrowers and stay in the business of providing capital for mortgage financing ... not be in the business of kicking people out of their houses.

Harrison K. Long, Explore Group Properties, Coldwell Banker Previews.

Harrison K. Long - Realtor & Broker (Explore Group Properties, Coldwell Banker Previews, South OC): Real Estate Agent in Irvine, CA

Posted by Harrison K. Long, REALTOR, Broker, expert negotiator on 01/10/2009 09:51 AM

Comments (14)

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14 Comments on Fannie and Freddie Should Further Extend Time Suspensions on Foreclosures

JAN

Hi Harrison,

I am not sure if more time, a foreclosure moratorium, is what is required to solve this foreclosure problem.

I think that moratoriums, much like modifications, delay the inevitable.

I still contend that unless we get a real housing stimulus bill that would provide a tax incentive for Americans to invest in real estate - it is going to be a very ugly next several years.

What a dilemma for all. Bad loans, bad decisions and then compounding them with not giving all enough time to make it work.

I think that in the cases where the curent home owners did not get them selves deeply into debt non-necessities should be given a change to work out the mortgage, if they have reasonable credit and can prove they are not just postponing what will happen in a few moths anyway.

Your Queen Creek Real Estate Specialist

http://www.QueenCreekRealEstateSolution.com

Mark ... thanks for your comment here. I believe that we are in for struggles in the real estate market for the next several years. However, that probably will not change much just with a new housing stimulus bill from US Congress. Best wishes. Harrison

Delaying foreclosure on a a bad loan to an unqualified buyer isn't going to solve this mess. I'm more for resetting loans for qualified buyers who are making their payments to help keep them from deciding to walk away. Let's face it. If you put 20% of your hard earned money down to buy a home and now not only is your 20% gone but another 100K because of all the foreclosures around you, why would you want to stay and throw good money after bad?

They should also go along with advanced approval for short sale negotiations. That would also help a ton.

Now Fannie and Freddie on Jan 9, 2009, announce a 3 month reprieve on foreclosures for its seriously delinquent homeowners and were joined by JP Morgan Chase. Plan is to allow homeowners to explore options. Fannie an Freddie anticipate up to 6,000 homeowners could save their homes from foreclosure while obtaining a low fixed interest rate mortgage with more favorable terms and affordable payments.

Gabe .. I agree that Fannie and Freddie should go along with advanced approval for short sale negotiations, which would indeed help. Thanks. Harrison

JAN

Hi Harrison, Certainly adding to the amount of foreclosed properties will not help, I like the Jan 09 decision and I hope they will continue to look for other avenues that might help decrease the number of vacant- non income producing houses on the market.

Mary .. thanks for your comment here. We agree that Fannie and Freddie and investors should look to other ways to decrease he number of non income producing assets. Harrison

JAN

Harrison:

While a housing stimulus bill may not be an immediate fix, I don't see how it will be possible for an economy to rebound until the housing market gets traction.

A lot of things are tied to housing: jobs, consumer spending, tax revenues for municipalities, credit - until we stabilize the market, all of this is going to be at risk.

Hi Mark .. thanks for your note here, and we agree that "things are tied to housing: jobs, consumer spending, tax revenues for municipalities, credit". However, I am uncertain whether our government should stabize the market .. or whether it should stablize itself. Harrison

I agree but it doesn't go far enough. I think homeowners should be allowed to renogotiate their loans based upon their credit worthiness without the burden of their credit score destroying the process. Credit scores by there very nature are corrupt and based, in many cases, on arbitrary statistic gathering that is inherently inaccurate.

JUL

Kent ... Thanks for your comment. I agree to some extent that the US government through Fannie and Freddie loans outstanding should agree to negotiate loans without looking only to credit scores. It's still important, however, that the government look at loan to value and make sure they are not new lending more than 120% of value of the property.

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