Freddie Mac Announces Workout Incentives

Freddie Mac Announces Workout Incentives

Last week, the Federal Home Loan Mortgage Corporation, known more commonly as Freddie Mac, announced that it would double the amount of money it pays for each workout that keeps a delinquent borrower with a Freddie Mac-owned mortgage out of foreclosure. Freddie also announced it will 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.
"We are taking these steps because we want to reinforce the tremendous importance of workouts and reward their use," said Freddie Mac Vice President of Servicing and Asset Management Ingrid Beckles. "Giving our servicers more time and greater compensation to help troubled borrowers is fundamental to preserving homeownership and maximizing our efforts to minimize foreclosures."
According to Beckles, starting Aug. 1, 2008, compensation for repayment plans will rise from $250 to $500 while loan modification compensation will increase from $400 to $800. These changes took effect Aug. 1.
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 go from $1,100 to $2,200 (also effective August 1. The higher amount recognizes the greater servicer staff time involved when negotiating property sales.)
Freddie Mac also said it 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 their servicer. Freddie Mac will also reimburse servicers up to $200 for additional fees paid to vendors for door knocking that results in successful alternatives to foreclosure. This policy is effective from Aug. 1, 2008, through March 31, 2009.
Freddie Mac also announced it is extending the time for foreclosures so servicers will have more time, if needed, to negotiate workouts with delinquent borrowers in Washington, DC, and 20 states with relatively fast foreclosure processes. Oklahoma is not among those states.
Freddie Mac's 0.86 percent single-family delinquency rate is a fraction of the most recent national single-family delinquency rate (6.35 percent) calculated by the Mortgage Bankers Association of America.


Thank you,

Jeff Sargent

Jeff Sargent
Residential Mortgage Division-President
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com