Foreclosure Freeze Continues

This is somewhat old news (from last Friday), but Fannie and Freddie have extended their foreclosure freeze.  From the AP via Newsday:

MCLEAN, Va. (AP) — Government-controlled mortgage finance companies Fannie Mae and Freddie Mac said Friday they have immediately suspended all foreclosure sales involving occupied single-family and 2-4 unit properties through March 6, to give troubled borrowers more time to work with loan servicers to avoid losing their homes.

J.P. Morgan Chase, Citigroup and Bank of America have also placed a moratorium on foreclosures. From the Wall Street Journal:

WASHINGTON — J.P. Morgan Chase & Co., Citigroup Inc. and Bank of America Corp. have committed to weeks-long moratoriums on foreclosures as the government works on a financial stability plan slated to include billions of dollars aimed at keeping people in their homes.

“We will not add to the foreclosure process any new owner-occupied residential loans that are owned and serviced by J.P. Morgan Chase,” the company’s chief executive, Jamie Dimon, said in a letter Thursday to Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee.

Sorry for the late breaking news. I mean late in the literal sense!

Federal Aid to Distressed Homeowners Closer to Reality

helicopters land

Two key Senators on the Senate Banking Committee have reached an agreement to help distressed homeowners.

According to Bloomberg:

“The primary goal is to keep people in their homes, but also to help establish a floor and a bottom” to the housing slump, Dodd, a Connecticut Democrat, told reporters during the call.

The proposed legislation would a create a Federal Housing Administration program to insure up to $300 billion in refinanced mortgages for struggling borrowers after loan holders reduce principal. The Banking Committee is scheduled to debate and vote on the plan tomorrow.

According to CNN Money:

The deal was struck between the top Democrat and Republican on the Banking Committee: Chairman Christopher Dodd, D-Conn., and Ranking Member Richard Shelby, R-Ala.

“This legislation is good news for both the markets and homeowners,” Dodd said in a statement. “The bill addresses the root of our current economic problems – the foreclosure crisis – by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes.”

Dodd and Shelby had been in prolonged negotiations over the bill.

A key sticking point has been Shelby’s push to shield taxpayers if borrowers default on their payments after getting government-backed loans. He has said that he wants the FHA plan funded by redirecting money that Dodd’s original bill earmarked for a new affordable housing trust fund. The funds would be paid by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).

I’ve already expressed my thoughts on this bill in a prior post called “FHA: The Be All and End All of Loans“. I’m just glad that the tax payer is not on the hook for any of this – if you’re to believe Uncle Sam that is. ;-)

Image: Shared under creative commons license from submarginals’.

Lenders Put Foreclosures on Hold for 30 Days

Lenders are in a bind. With foreclosures increasing every day, their REO departments are overloaded. Foreclosure is expensive and banks are in no mood to be property owners. So, why not just try to work thing out with the distressed borrower? That seems to be the line of thinking as major lenders have announced that they will put foreclosures on hold for 30 days. During this time they will work with the borrower to figure a workable solution for both parties. This applies to all kinds of borrowers, not just subprime. From MSNBC:

These lenders say they will contact homeowners who are 90 or more days overdue on their monthly mortgage payments. They will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to the homeowner.

To clarify, this appears to be a voluntary program and is not a “law”. Which means a lender has the last word and is not under any obligation to award the 30 day freeze. If you think you qualify contact your lender directly.

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