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Fannie and Freddie Announce Foreclosure Guidelines

Posted by Benjamin Dona on Friday, April 29th, 2011 at 5:02pm.

Freddie Mac and Fannie Mae Foreclosure NewsThe government sponsored GSEs Fannie Mae and Freddie Mac have announced new standard guidelines for Loan Servicers to follow during the foreclosure process.

Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco said "by the end of 2011, foreclosures under Fannie Mae and Freddie Mac must follow the same procedures and Loan Servicers under Fannie and Freddie will be rewarded if they perform well and punished if they do not."  In addition, the GSEs hope the new guideline will help minimize taxpayer losses by ensuring that (Fannie and Freddie) loans are serviced more efficiently and fairly.

Under the new guidelines:

  • Loan servicers cannot work with homeowners on their loans while simultaneously moving forward with a foreclosure, called a "dual track"  by FHFA.
  • Loan servicers must contact homeowners as soon as they become delinquent and focus solely on remediating that delinquency. As long as the "borrower and servicer are engaged in a good-faith effort to resolve the delinquency,"  a foreclosure cannot move forward.
  • The servicer must formally review each case before taking any actions to consider the homeowner for any foreclosure alternatives.
  • Loan servicers will be rewarded for speed. If a loan is modified in some way within four months, for example, the servicer receives $1,600. If it takes over seven months, however, the servicer gets only $400.
  • Even if the foreclosure process has already begun, loan servicers will be paid a "financial incentive"  if they continue to help the homeowners find an alternative to foreclosure.

In addition, there will be fewer forms to fill out. According to Freddie Mac Chief Executive Officer Charles Haldeman Jr, "it will simplify the process by giving borrowers one application to fill out and servicers one application to review for all loan modifications and foreclosure alternatives."

Fannie Mae and Freddie Mac said they will issue detailed information to their servicers later in the year.

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8 Responses to "Fannie and Freddie Announce Foreclosure Guidelines"

Gilbert wrote:
Fannie and Freddie at it again. I'm surprised they can keep up with their own guidelines as they change them so much. I can't wait until we are done with this distressed property mess.

Posted on Saturday, April 30th, 2011 at 4:25am.

Bob wrote:
Yes, I agree with Gilbert. It is like these guys never asked "what if's". They seem to be figuring these things out as they go along - meanwhile, many homeowners are being frustrated and have been forced to place their lives in a holding pattern while the big Govy lenders get their #$^&%# together!

Posted on Saturday, April 30th, 2011 at 10:36am.

Bill in Sarasota wrote:
It's just like we all used to do as children while playing our games. We'd make up the rules as we went along, contradictions and all.

Posted on Wednesday, May 4th, 2011 at 5:03pm.

Alex Aguilar wrote:
Looks like the government is trying everything it can to prevent and delay foreclosures proceedings with delinquent borrowers. Whatever improves the monthly economic indicators I guess...

Posted on Thursday, May 5th, 2011 at 5:35pm.

Adam wrote:
Ha - Great analogy Bill! Thanks for the post.. good read.

Posted on Monday, May 9th, 2011 at 5:16pm.

Joe McDermott - Temecula wrote:
This was great news. Having to fight the looming trustee's sale while negotiating a short sale is a huge PITA. The homeowner thinks we're not doing job and it add's a lot of unnecessary drama to a process that is hard enough.

Posted on Tuesday, May 10th, 2011 at 12:38pm.

Hamid in Oakland wrote:
The GSE's seem like they are in a constant state of flux, new this, new that....intresting times we are living in. Now they are talking about a program to rent out Fannie/Freddie foreclosures instead of selling them.

Posted on Wednesday, August 10th, 2011 at 8:29pm.

Ariel B. wrote:
Great Blog. Thanks for the post, it made me laugh when I first read the title of the blog. Freddie and Fannie are always changing there guidelines it seems like. I can hardly keep up. I closed on one Freddie property a few weeks ago and opened escrow on another a week later and had completely different guidelines to work with. Oh well keeps me on my toes.:)

Posted on Thursday, September 8th, 2011 at 9:29pm.

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