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Fannie Freddie to coordinate late mortgage guidelines
WASHINGTON (4/29/11)—Fannie Mae and Freddie Mac will soon align their guidelines for servicing delinquent mortgages that they own or guarantee in an effort to help servicers better resolve delinquencies, to keep owners in their homes, and to minimize taxpayer losses. The mortgage servicers plan to issue new detailed guidelines to mortgage servicers in the second or third quarters of this year. The alignment, which was ordered by Federal Housing Finance Agency Acting Director Edward DeMarco, will, according to the FHFA, “establish uniform servicing requirements as well as monetary incentives for servicers that perform well and penalties for those that do not.” DeMarco said that the directive should “result in earlier servicer engagement to identify the best solution available for homeowners, given their individual circumstances.” The updated guidelines will streamline and expedite borrower outreach, align mortgage modification terms and requirements, and establish a consistent schedule of performance-based incentive payments and penalties, the FHFA said. Servicers will be required to contact borrowers as soon as they become delinquent and servicers will need to focus solely on remediating the given delinquency. The FHFA release added that “the foreclosure process may not commence if the borrower and servicer are engaged in a good-faith effort to resolve the delinquency.” Each delinquency case must be reviewed to ensure that foreclosure alternatives have been considered, and financial incentives will be provided to “encourage servicers to continue to help borrowers pursue a foreclosure alternative.” “Once fully implemented by the servicing industry, the Enterprises’ aligned policies should give homeowners a greater understanding of the process and faster resolution by requiring earlier contact, more frequent communication, and prompt decisions,” DeMarco said. For the full release, use the resource link.
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