Help (maybe) for people in trouble

You may know someone who is facing foreclosure. More and more of our neighbors are. If you do, please pass this news on. It might help!


NEW YORK (CNNMoney.com) -- Mortgage giants Fannie Mae and Freddie Mac have extended a moratorium on foreclosure suspensions for another three weeks, directing the mortgage servicers they work with to postpone any foreclosure or eviction proceedings through January 31.

Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) projected that, under the original moratorium, which began Nov. 26 and was scheduled to lapse on Jan. 9, 6,000 homeowners would avoid bank repossession and eventually qualify for mortgage modifications. The companies don't have any actual statistics tracking how many borrowers the moratorium has helped.

The extension should give servicers more time to help these at-risk homeowners enroll in the companies' Streamlined Modification Program.

That program is aimed at helping borrowers who are 90 days or more late on payments, who own and occupy their primary residences and who have not filed for bankruptcy to reduce mortgage payments to no more than 38% of their income. It was launched by Freddie and Fannie on December 15, 2008.

"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 Mac CEO David Moffett in a prepared statement. "Today's announcement will provide Freddie Mac and its servicers additional opportunities to help put more families on the path to stable homeownership."

Renters benefit too
The foreclosure grace period applies to owners of single family homes as well as multiple family houses of two to four units that are occupied by renters. In addition to cutting the number of foreclosures, it could also help some families who rent apartments remain in their homes.

In the past, when building owners were foreclosed on their renters often faced immediate eviction, even when the renters were up to date with their payments.

In December, Fannie announced a new policy for renters called the National REO Rental Policy, which allows these renters to stay in their homes as long as they have legitimate leases and keep up with their rent payments.

The company said the additional three weeks of the moratorium will enable Fannie to put this new REO Rental policy more fully into operation.

It will also give Fannie more time to make sure all of its seriously delinquent borrowers who are eligible receive help from the company's "Second Look" initiative.

Under this program, which launched early last fall, Fannie Mae personnel work with servicers to make sure that all homeowners facing foreclosure have been contacted and told of the possible workout options available to them.

The more information the companies can get to homeowners, the more likely they are to save their homes.

Information on foreclosures

October 30, 2008 -- Realty Times Feature Article by Broderick Perkins

"Defaulting on the Dream: States Respond to America's Foreclosure Crisis" is a must read for home owners struggling with their mortgage.

Produced by the Pew Charitable Trusts as the first detailed dissertation to chronicle the impact of the foreclosure crisis at the state level, the report is chock full of "where-to-go-for-help" advice.

"The stakes are incredibly high. Home ownership is the primary vehicle through which American families build financial security. It also is an essential building block of state and local economies," according to Pew managing directors Susan Urahn and Shelley Hearne.

Their timing is impeccable. One in 33 current U.S. homeowners may be headed toward foreclosure in the coming years because of subprime loans, and in some states the crisis is more acute. In Arizona, one in every 18 homeowners could lose their home. In Nevada, the ratio is one in 11, according to the report.

The report charts some assertive, even experimental state efforts to mitigate financial harm to homeowners, lenders, local communities and state budgets.

To help borrowers avoid foreclosure and keep their homes, 20 states (including California, Colorado, New York and Nevada) have launched formal foreclosure intervention or prevention initiatives.

Sixteen states (along with those above, including, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio and Pennsylvania) have enacted both high-cost lending and foreclosure intervention laws.

Thirteen states (among them Arizona, Illinois, Indiana, Iowa and Minnesota) have created counseling hotlines to help the foreclosure-at-risk, and several states are encouraging (too often reluctant) lenders to work with borrowers to find alternatives to foreclosure.

Nine states (including Delaware, Maryland, Michigan and Ohio) have established loan funds that can be used to refinance borrowers who have loans they cannot afford or to provide short-term loans to help borrowers overcome financial difficulties.

To protect vulnerable borrowers from unscrupulous real estate investors, nine states have created laws regulating firms that claim to "rescue" borrowers from default. Since the downturn, rescue operations have preyed upon vulnerable home owners.
And in an effort to prevent problematic loans from being made in the first place, 31 states (among them, Arkansas, Georgia, Kentucky, Oklahoma, Texas and Utah ) have implemented laws that address predatory lending.

The report also explains the foreclosure process and lists home owners options when they default (become more than 30 days late on a payment) on their mortgage.

Bring the account current by paying the past due balance on their loan, including late charges and other fees assessed by the lender.

Renegotiate the terms of their loan with the lender.

Pay off their loan by refinancing the loan with another lender.

Sell the property to pay off the current loan, if the home is worth more than the mortgage. Or if the property is not worth the mortgage balance, engage a "short sale" where the lender forgives a portion of the debt provided a seller is available to buy the home.

Voluntarily convey the property back to the lender through a deed–in-lieu of foreclosure.

The report also lists a host of relief efforts, some on the state level, some not, some well known, some not so well known, including:

Homeownership Preservation Foundation creates partnerships to help families overcome obstacles that could cause foreclosure.

National Consumer Law Center uses consumer law to promote marketplace justice for vulnerable home owners and families.

Check with your state housing, consumer, social or community agencies to determine what home owner and mortgage programs and assistance is available to help see you through hard times.