January 9, 2012 (Jeff Alan)
Unemployed borrowers who have their mortgages owned or guaranteed by Freddie Mac may be eligible for up to 12 months of forbearance starting February 1, 2012. The new guidelines double the existing policy’s eligibility period.
Under the previous guidelines, mortgage services were allowed 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.
Under the new guidelines, mortgage servicers can now approve unemployed borrowers for six months of forbearance without prior approval from Freddie Mac and can extend the forbearance period up to an additional six months with prior Freddie Mac approval, giving eligible unemployed borrowers up to one year of forbearance.
Previously, longer forbearance was generally restricted to events such as natural disasters, permanent disability or long-term medical emergencies and required prior approval.
Tracy Mooney, Senior Vice President, Single-Family Servicing and REO at Freddie Mac, stated, “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.”
Mortgage servicers who currently have delinquent borrowers in an existing short term forbearance plan can have the borrowers re-evaluated for an extended forbearance under the new policy.
Freddie Mac estimates that nearly ten percent of the delinquencies in its portfolio are a result of unemployment.
We believe this will put more families back on track to successful long-term homeownership,” Mooney added.
Tags: Freddie Mac, Mortgage relief, forbearance, mortgage services, unemployed borrowers