Your Get Out of Jail Free Card for Real Estate

Real Estate Agent with Prudential Calfornia Realty

If you miss a mortgage payment, the lender has a right to foreclose — to sell your property and recover the loan amount plus foreclosure costs. However, lenders sometimes prefer to work out matters so that foreclosures can be avoided because a typical foreclosure action results in a $40,000 loss to the loan owner. If you can make up the missing payment and otherwise satisfy the lender it may be possible to avoid foreclosure. Not foreclosing is an act of forbearance.

This post is about not being foreclosed on, especially if you lost your job.

Let’s just call it “letting you off the hook” albeit temporarily…

Fannie Mae today it is going to have banks provide six months of forbearance(let you off the hook for 6 months) for unemployed homeowners without Freddie Mac’s prior approval and up to an additional six months with prior approval.

This means unemployed owners may be eligible for up to 12 months ofget out of jail free so to speak. 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.
  • Banks 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. We believe this will put more families back on track to successful long-term homeownership.”


I hope that this helps you or anyone you know if they are in this stressful situation. Feel free to reach out to us if you need advice at


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