Freddie Mac Doubles Incentives To Servicers For Preventing Foreclosure

Freddie Mac says it is doubling the amount of money it pays mortgage servicers for each workout that keeps a delinquent borrower with a Freddie Mac-owned mortgage out of foreclosure. Compensation for repayment plans will rise from $250 to $500, while loan modification compensation will increase from $400 to $800. For short sales or pre-foreclosure sales, where Freddie Mac agrees to accept less than the full amount owed on a borrower's loan, compensation will increase from $1,100 to $2,200.

The government-sponsored enterprise (GSE) will also start reimbursing servicers for the cost of door-to-door outreach programs, give servicers more time to negotiate workouts in states with fast foreclosure processes, and make administrative changes intended to streamline the workout process.

Additionally, Freddie will now reimburse the cost of leaving a door hanger up to $15 per mortgage and up to $50 per mortgage for a door knocking that results in the borrower contacting his or her servicer. The GSE will also reimburse servicers up to $200 for additional fees paid to vendors for a door knocking that results in successful alternatives to foreclosure. This policy is effective from August 1, 2008, through March 31, 2009.

To qualify for the reimbursement, the servicer must show that the mortgage was at least 90 days delinquent, that the servicer had no prior contact with the borrower and that the outreach was done by an independent, third-party vendor.

Source: Freddie Mac

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