FANNIE MAE, FREDDIE MAC - Foreclosures Suspended During the Holidays!
TEMPORARY FORECLOSURE SUSPENSION IMPACTS 16,000 BORROWERS - NO SALES OR EVICTIONS THROUGH JANUARY 9, 2009!
Even as giant U.S. Loan Guarantors and Investors Fannie Mae and Freddie Mac put the finishing touches on their own program to modify the loans of some of its delinquent home borrowers, the companies are offering a bit of a holiday reprieve for some of its distressed borrowers headed to foreclosure.
The companies announced Thursday plans to suspend foreclosure sales of many owner-occupied single-family and two-to-four-family apartment buildings between November 26th, 2008 and January 9th, 2009.
Last week, Fannie and Freddie announced plans to modify the loans - to far more affordable interest rates and monthly payments - on borrowers who are a minimum of three months delinquent on their house payments, and who can document enough household income to afford a modified loan no higher than 38% of their monthly take-home pay.
Although Fannie Mae and Freddie Mac hold a fairly small percentage of all mortgages held by home borrowers in distress, they hope their example will be adopted by other lenders and mortgage-servicing firms.
Until recently, the long-held position of the mortgage lending industry involved handling delinquent home borrowers one at a time. This is a costly and time-consuming process, both for the lenders and the borrowing consumers, as average home prices have continued to tumble in many areas across the U.S., and foreclosures have skyrocketed.
The costs for lenders to take back foreclosed homes, and later sell them at a steep discount, continues to climb quickly. Hence, their desire to address the problem on a more streamlined, far faster basis.
Freddie Mac presently holds 28,089 foreclosed properties, as of the end of the Third Quarter, 2008. That's nearly a 136% jump from 11,916 at the end of the Third Quarter, 2007. Sales proceeds from the sale of these foreclosed homes averaged 29% less than the loan balance due. The same deficit was 14% one year ago.
Fannie Mae held an inventory of 67,519 single-family foreclosed homes on September 30th - up from 54,173 at the end of the Second Quarter of this year, and 33,729 at the end of 2007. The net sales prices for Fannie's foreclosed home sales fell to an average of 30% of the outstanding loan balance, from 22% less one year ago.
Read Aparajita Shah-Bubna's article in Friday's Wall Street Journal for more info.
DEAN MOSS & DEAN'S TEAM CHICAGO
