Freddie Mac and Foreclosure

Freddie Mac mortgages cover about 23% of the market which is about 12 million single family owners. Unluckily for some, in the market there are about 2.1 million homes that are foreclosed, including thousand held by Freddie Mac.


We can understand Freddie Mac posture on foreclosure, knowing that first, less than 500,000 Freddie Mac homeowners are presently in critical default on their mortgage. That is just 10% of critical delinquencies in the entire market.

Next, meanwhile 114,000 foreclosures were managed by Freddie Mac in the first 9 months 0f 2010, another 211,000 delinquent Freddie Mac borrowers were able to desist foreclosure. And this was possible because Freddie Mac´s policies changed and they decided they could extend to its servicers the ability to stop foreclosure in exchange of an alternative plan. Some options of the alternative were short sales, loan workouts or a deed-in-lieus.

According to Anthony Renzi, executive vice president at Freddie Mac, "Borrowers are not being rushed through the foreclosure process. It takes 449 days, on average, to complete a foreclosure on a Freddie Mac loan. In these foreclosures, borrowers had been behind on their payments for an average of more than a year."

And not only homeowners desire to avoid foreclosure. Extended foreclosure delays cost Freddie Mac $10,000 to $15,000 a year per mortgage. Plus, accordin to Renzi, "We pay the loan servicing industry about $5 billion per year to service our loans. We offer additional financial incentives for servicers to avoid foreclosure."

Perhaps above all, Freddie Mac holds its servicers to the credo to "treat borrowers fairly, with respect, and in full compliance with all applicable laws, regulations, and Freddie Mac policies."

By: Enma Diaz, Editor