GSEs Extend Foreclosure, Eviction Suspensions

Both Fannie Mae (FNM) and Freddie Mac (FRE) said Thurday morning that they had extended a prior freeze on foreclosure sales and evictions on single-family properties through Jan. 31, as both continue to work on implementation details surrounding the Streamlined Modification Program, or SMP. Both GSEs had halted foreclosures and evictions on Nov. 21, originally suggesting the freeze would expire on Jan. 9. For Fannie Mae, the extension will also provide additional time for the company to operationalize what it is calling its new National REO Rental Policy, which will allow renters in company-owned foreclosed properties to stay in their homes. Details of the new policy are expected to be announced shortly, company officials said in a press statement. Both GSEs touted the timeline extension as part of a commitment to working with troubled borrowers. “Freddie Mac is committed to pursuing every responsible opportunity to reduce foreclosures and accelerate the return of stability to the U.S. housing market,” said Freddie CEO David Moffett in a statement. “Today’s announcement will provide Freddie Mac and its servicers additional opportunities to help put more families on the path to stable homeownership.” The SMP, announced on Nov. 11 of last year, is aimed at borrowers who have missed three payments or more, owns and occupies the primary residence, and has not filed for bankruptcy. Critics have suggested the bulk modification effort will encourage borrowers to default on their mortgages, in order to obtain favorable interest rates and possible principal reduction on their mortgages. Write to Paul Jackson at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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