Freddie Mac Doubles Financial Incentives to Servicers Who Help Borrowers Avoid Foreclosure

This is GREAT NEWS I just received from Mortgage News Daily!!!

I would love to get everyones opinion one these matters... The Lenders are finally swallowing their pride and they have also figured out that they CAN NOT hold property.

What are everyones thoughts???

Click on the comment link on the bottom of the page to post your comments.

Report Source: Mortgage News Daily

Freddie Mac today told mortgage servicers it was doubling the amount of money it pays for each workout that keeps a delinquent borrower with a Freddie Mac-owned mortgage out of foreclosure.

Freddie Mac also announced it will start reimbursing servicers for the cost of door-to-door outreach programs, give servicers more time to negotiate workouts in states with fast foreclosure processes, and make administrative changes intended to streamline the workout process.

"We are taking these steps because we want to reinforce the tremendous importance of workouts and reward their use," said Freddie Mac Vice President of Servicing and Asset Management Ingrid Beckles. "Giving our servicers more time and greater compensation to help troubled borrowers is fundamental to preserving homeownership and maximizing our efforts to minimize foreclosures."

According to Beckles, starting August 1, 2008, compensation for repayment plans will rise from $250 to $500 while loan modification compensation will increase from $400 to $800. For short sales or pre-foreclosure sales, where Freddie Mac agrees to accept less than the full amount owed on a borrower's loan, compensation will go from $1,100 to $2,200. (The higher amount recognizes the greater servicer staff time involved when negotiating property sales.)

Freddie Mac also said it will now reimburse the cost of leaving a door hanger up to $15 per mortgage and up to $50 per mortgage for a door knocking that results in the borrower contacting their servicer. Freddie Mac will also reimburse servicers up to $200 for additional fees paid to vendors for door knocking that results in successful alternatives to foreclosure. This policy is effective from August 1, 2008, through March 31, 2009.

To qualify for the reimbursement, the servicer must show that the mortgage was at least 90 days delinquent, the servicer had no prior contact with the borrower, and that the outreach was done by an independent third party vendor.

Freddie Mac also announced it is extending the time for foreclosures so servicers will have more time, if needed, to negotiate workouts with delinquent borrowers in Washington, DC, and 20 states with relatively fast foreclosure processes.

In addition to Washington, DC, the affected states include Alabama, Alaska, Arizona, Arkansas, California, Georgia, Hawaii, Maryland, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, North Carolina, Rhode Island, Tennessee, Texas, Virginia, West Virginia and Wyoming.

Specifically, starting August 1, 2008, servicers are allowed up to 300 days (10 months) from the due date of the last payment to the foreclosure sale in these states to seek aggressive and sustainable workout solutions for the borrowers and still meet the standards set in Freddie Mac's Servicer Performance Profiles. The company uses the Servicer Performance Profiles to measure and reward the quality of a servicers' investor reporting and default management.

Even though the laws in these states permit a lender to foreclose in less than 300 days, this announcement means Freddie Mac will permit its servicers more time to complete foreclosures. The new policy won't affect borrowers in states where the foreclosure process already exceeds 300 days.

Short Sales and Loan Modifications

Every day as we continue to see the effects of this declining market throughout the nation. More and more homeowners become unable to refinance their home and default on their loans do to many reasons.

1. Over leveraged Property - Meaning they owe more on their mortgage than the property is actually worth.

2. Credit - The homeowners credit score may have dropped due to many reasons.

• Unable to pay the new adjustable rate thus affecting their credit due to becoming 30 days late or more on their excising loan.


• Using their own credit cards to pay bills thus rocketing their balances and reducing their credit score.


• Homeowners request for new credit lines in the past 12 months or so thus adding more inquiries and dropping their credit score.


• New collections, bankruptcies, liens, judgements, delinquencies, repossessions, etc... These factors will also bring your credit score down.
  

3. General Hardships - Such as loss of job, death of spouse or family member, divorce, etc... All these factors my have caused hardships for the homeowner and declining their monthly income. The more common hardships you see in this day and age are the A.R.M.'s (Adjustable Rate Mortgage) and the homeowners inability to catch up on the monthly increased payments.

The homeowner may feel that there is no way out and may just want to give up! The homeowner may also feel insoluble and let the property go to foreclosure. I am here to tell you that my company along with over 10 attorney's and loss mitigation specialist can help you overcome those fears and provide you with solutions.

Solution 1. Loan Modification
A loan modification is simply a stated refinance with no closing.
We will negotiate with your lender to try to accomplish an agreement so you stay in your home. If negotiations are successful we will be capable of freezing your adjustable rate thus bringing down your payments and saving your home. Since my company is an affiliated company of a large law firm you can stay in your home for over 12 month and in some cases over 18 months until a resolution is accomplished. This means the attorney's will go to court for you and fight for your rights. The way you want to look at this solution as I said above, is a stated refinance with no closing.

This means:
1. We will refinance your home even though you are over leveraged on your home, have bad credit, and you may have experienced some hardships.
2. You don't have to pay for closing cost.
3. You may possibly be able to stay in your home payment free until we provide a resolution.

Now will this help you sleep a little better at night. I think so...

Solution 2: Short Sale
A short sale is the bank accepting less for the mortgage you owe.
Did you know that lenders (banks) do not want foreclosures? Why? I will tell you why... Banks are in the business of collecting interest on your loan. They make a ton of money on the interest they collect off you. Many times you pay more interest on your property then what you actually paid for it. Now, what happens if you stop paying your mortgage? The banks stop making money. Banks are not in the business of buying or holding property. If they get stuck with your property a lot of the time they will not sell at a public auction. The property goes back to them and it becomes a non-preforming asset. That means they just loaned you a bunch of money and they will never get it back.

Now, back to short sales.... The bank would rather sell us the loan at a discount than having it go to a public auction. We will submit, negotiate, work our hardest to try and get it approved, and then sell your property thus saving your credit and getting you back on track. In this process since we work with licensed attorney's, we will extend and postpone the public sale date for as long as it takes.

Solution 3: Do Nothing!!!
Dictionary.com's definition of (Do Nothing) is: characterized by inability or unwillingness to initiate action, work toward a goal, assume responsibility, or the like:

Now, is this what you want to do? I didn't think so...

Again, we are here to let you know that you have options and, you might want to steer away from the third one.

Feel free to post your comments on this blog or you may email me for a more personalized, confidential, and free consultation meeting.