Freddie Mac Bailout Not Expected to Effect Hurricane Relief
September 08, 2008
This weekend it was announced that the Treasury Department will take over the operations of mortgage companies Freddie Mac and Fannie Mae to prevent mortgage-backed securities from defaulting and provide more stability to the nation's real estate market. This news followed by less than one week the hurricane assistance initiative aimed at homeowners in the South and Southeast affected by the summer's hurricanes. At this point in time it appears that the measure proposed by Freddie Mac will still be put in place.
Press Release from Freddie Mac on September 3rd, 2008:
Freddie Mac (NYSE: FRE) today reminded its servicers of the disaster relief options available to borrowers with Freddie Mac-owned mortgages who were affected by Hurricane Gustav. Freddie Mac is one of the nation’s largest investors in residential mortgages.
"Freddie Mac and the nation's mortgage servicers will work together to bring some measure of financial relief to homeowners affected by Hurricane Gustav" said Ingrid Beckles, vice president of servicing and asset management at Freddie Mac. "Borrowers affected by Hurricane Gustav should contact their mortgage servicers for mortgage relief if their homes have been damaged or destroyed."
Servicers can offer relief under Freddie Mac guidelines to borrowers whose homes were damaged or destroyed, as well as borrowers who may be unable to make their mortgage payments because they were evacuated to avoid the storm. Servicers should assess each case individually to determine if relief is warranted and which option best fits the homeowner's circumstances.
In addition, Freddie Mac gives servicers the discretion to reduce or suspend mortgage payments or foreclosure proceedings for up to 12 months for borrowers with Freddie Mac-owned mortgages in federally declared major-disaster areas where individual assistance was provided.
Freddie Mac also strongly encourages servicers to extend several other measures to help affected borrowers with Freddie Mac-owned loans:
Waiving assessments of penalties or late fees against borrowers with disaster-damaged homes; and,
Not reporting borrowers to the nation's credit bureaus when a forbearance or repayment plan has been extended because of the disaster
