Freddie Mac Announcement for the Unemployed

Freddie Mac offers a break to unemployed homeowners
ByIlyce Glink .20 Comments
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(MoneyWatch) Unemployed homeowners will be allowed to suspend or reduce mortgage payments for as long as a year under a new policy announced by mortgage finance firm Freddie Mac on Friday. The new rules take effect on Feb. 1.

Freddie Mac will give mortgage servicers the authority to provide six months of forbearance to unemployed borrowers without prior approval, and the agency can approve an additional six months of forbearance after that. Homeowners are still responsible for paying off their full mortgage plus interest after the forbearance period ends.

According to a Freddie Mac news release, unemployed borrowers can now avoid foreclosure by asking their lender to lower their payments for up to one year. The latest statistics suggest nearly 10 percent of delinquencies on Freddie Mac mortgages were tied to unemployment.

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The Federal Housing Finance Agency (FHFA) called for the extension, in the hope it would keep more families in their homes. Freddie Mac previously allowed lenders to grant up to three months of forbearance with no payment, or six months at a reduced payment, without the firm’s prior approval.

Longer forbearance times were restricted to events such as natural disasters, permanent disability or long-term medical emergencies, and still required prior approval.

“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,” Tracy Mooney, Senior Vice President of Single-Family Servicing and REO at Freddie Mac, wrote in a news release. “We believe this will put more families back on track to successful long-term homeownership.”

Delinquent borrowers with Freddie Mac owned- or guaranteed-mortgages who are in an existing short-term forbearance plan can be evaluated for an extension under the new policy.

Borrowers interested in learning more about the forbearance program should contact their mortgage servicer. A list of phone numbers can be found at BankRate.com.

If you are unemployed and need financial help, contact your lender or the Homeowner’s HOPE Hotline, 888-995-HOPE.

Delivered Rotary Food and Toy Baskets

Today we delivered several food and toy baskets as well as a turkey to struggling families around Copperopolis. They were all so appreciative.

Crisis Center Donations of Blankets and Coats

Thank you to everyone who helped with donations to the Calaveras Crisis Center. We collected a pickup truck load of coats, sweaters, sweatshirts, and blankets. They were so thrilled to receive this donation. We had a few checks to contribute also.

Cindy

Delivering a truck full of coats, blankets, and sweaters for the Calaveras Crisis Center

Ed and Cindy at the Food Bank in Calaveras County

Holiday Happenings

Women’s Crisis Center In Need of Donations

CLICK COAT AND BLANKET DONATIONS

BIG 4 SET TO PARTICIPATE IN HARP 2.0

The industry’s four largest mortgage servicers all say they will be taking part in the revamped Home Affordable Refinance Program (HARP).

Bank of America, Chase, Citigroup, and Wells Fargo have each expressed their support of the program and the changes that will allow more underwater homeowners to refinance at today’s lower interest rates.

Government officials expect the program’s revisions – particularly the GSEs’ waiver on representations and warranties – to increase competition for mortgage refinancing.

An executive with JPMorgan Chase told the company’s investors this week that HARP 2.0 will facilitate “cross-servicing refinancing” because with the rep and warranty waiver, the new lender is not required to assume responsibility for underwriting deficiencies that may have occurred with the original loan.

Chase explains that HARP may be used to replace an adjustable-rate or interest-only loan with a standard fixed interest rate loan, and typically reduces the borrower’s monthly payment.

Frank Bisignano, CEO of mortgage banking at Chase, estimates that with the new HARP guidelines, thousands of Chase customers could lower their mortgage payments by an average of $2,500 a year.

Citi said in an emailed statement that it “supports the program and expects to participate.”

Wells Fargo, likewise, said in a statement that it “welcomes the addition of the new HARP features.”

Veronica Clemons, a spokesperson for Wells Fargo Home Mortgage, says the company is waiting for specific guidelines and requirements from Fannie Mae and Freddie Mac in order to put the changes into practice.

She adds that once the company’s mortgage servicing team has the guidelines in hand, “it will take us some time – depending on the complexity of the guidelines – to make the necessary systems changes to begin offering the new enhancements to our customers.”

The GSEs’ regulator, the Federal Housing Finance Agency (FHFA), says Fannie and Freddie plan to issue guidance with operational details about the HARP changes by November 15th.

“Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers, and other market participants modify their processes,” FHFA said.

Bank of America says it will participate in the enhanced Home Affordable Refinance Program announced by the administration, and it expects the new guidelines and eligibility criteria to go into effect after December 1st.

“Despite ongoing economic challenges, nearly 90 percent of our customers remain current on their mortgage,” BofA spokesperson Rick Simon said. “HARP helps these homeowners who remain current on their mortgage with options to lower their monthly payment when, otherwise, conventional funding options are limited.”

The GSEs have removed the 125 percent loan-to-value (LTV) cap under the program. Now any borrower with an LTV ratio above 80 percent is eligible for a HARP refinance, as long as the loan was sold to Fannie or Freddie prior to May 31, 2009, and the borrower is not delinquent on their payments.

Since HARP was launched in 2009, nearly 900,000 loans have been refinanced through the program. Government officials estimate that an additional 1 million homeowners will receive assistance under the new guidelines.

In its announcement of the program changes, FHFA encouraged borrowers to “contact their existing lender or any other mortgage lender offering HARP refinances.”

By Carrie Bay

Fed Decision

Federal Reserve chairman Ben Bernanke — AP file photo The Federal Reserve on Wednesday announced it’s changing its investment strategy, which could translate into lower mortgage rates down the road, market watchers say.

Related: Fed to shift $400B in holdings to boost economy

Related: What’s Operation Twist?

The committee’s words:

To help support conditions in mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction.

What does that all mean?

Michael Lea, director of SDSU’s real estate center, said officials are basically selling off shorter-term Treasury holdings for longer-term ones and mortgage-backed securities.

“They’re changing the composition of their balance sheet,” said Lea, a past chief economist of mortgage giant Freddie Mac. “This isn’t a new round of quantitative easing. They’re reinvesting, not injecting more money into the economy.”

The decision could push down long-term interest rates, and in turn, mortgage rates.

Why is this needed when home-loan rates are historically low?

“Mortgage rates are not the problem,” Lea said. At issue, is weak demand for mortgages because of income uncertainty and unemployment coupled with tight lending guidelines.

“This will have very little impact on the average person,” Lea said. “It’s meant to signal to markets that the Feds are still trying to do something.”

Greg McBride, of financial site bankrate.com, also weighed in on Twitter.

“What will Fed’s Operation Twist do?,” wrote McBride, referring to Wednesday’s plan. “It might push down mortgage rates. But it will also squeeze bank margins, leading to lower savings yields.”

New in Saddle Creek

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Custom home just listed in Saddle Creek with views of the 7th Fairway. Located on a culdesac -this single story home with over 3300 sq.ft. boasts a nice flowing floorplan – perfect for entertaining or family enjoyment. There are 4 bedrooms and 2.5 baths. The large great room has a fireplace and patio sliding doors to the massive deck. The kitchen has an island plus a breakfast bar and an area for a table and chairs. There is also a formal dining room. Priced at $639,000
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