Fannie Mae and Freddie Mac again under pressure to suspend foreclosures
Just last week, Fannie Mae and Freddie Mac hit the headlines for insisting lenders to start foreclosureproceeding in full swing. Many condemned this. A report dated 1 December 2010 stated that lawmakers and federal regulators pressed the mortgage giants to suspend foreclosure properties. They opined that Fannie and Freddie should shelve cases until the distressed homeowner’s availed modifications or new mortgages as solution to their delinquent loans.
This statement was denied by Freddie Mac’s Executive Vice President Donald Bisenius, who said that following a dual process where in foreclosures and modification processes run hand in hand will save time, reduce overall losses, affliction and is in favor of both the parties, the borrowers and lenders.
However, contrasting this comment of Donald Bisenius, the Acting Comptroller of Currency, John Walsh, mentioned at a Senate committee meeting on Monday 1st December that the dual process is indeed confusing the already anguished homeowners and lengthening the overall process. He also stated in the congressional hearing that his agency was pressing lenders to suspend foreclosures until the time the modification process is complete. He also blamed Fannie Mae and Freddie Mac for their contribution to the housing market crisis.
In self-defense, executives from Fannie Mae and Freddie Mac pointed out that they were not liable to manage the payments and foreclose on delinquent homes. According to them, it is responsibility of the lenders and law firms, Fannie and Freddie, hire on contractual basis to not only collect payments, but also work closely with the borrowers in difficult times like foreclosure crisis.
Terrance Edwards, Executive Vice President of Credit Portfolio Management at Fannie Mae, added: “We pay servicers significant fees during the life of a loan to work with borrowers. Servicers are required under our servicing contracts to help borrowers in trouble, not just collect payments.” In addition to this, Donald Bisenius pointed out: “Freddie Mac provides guidelines for the origination and servicing of our loans, and contracts with sellers and servicers to carry out these operations.”
People present at the hearing were of the opinion that Fannie and Freddie hire law firms and other servicers to process the cases. Therefore, lenders who operate nationwide encounter problems due to plethora of documents that are required to complete the procedures with these third parties. However, after much speculating, the mortgage titans agreed to suspend foreclosures for holiday period starting from 20th Dec 2010 to 3rd Jan 2011.
Source: Original post: http://www.mostlyforeclosures.com/blog/fannie-mae-and-freddie-mac-again-under-pressure-to-suspend-foreclosures.html on MostlyForeclosures.com, your source of lists of foreclosure.
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