Seven Facts About Freddie Mac and Foreclosures
Are you confused about the foreclosure process? Many people are. And that's understandable, given the many players, the operational complexities, and the capacity challenges the housing industry faces today. From my perspective overseeing Single Family Portfolio Management at Freddie Mac, I see the following facts – important facts that sometimes get overlooked:
- Freddie Mac owns or guarantees about 12.4 million single-family mortgages. Less than 500,000 of these loans are seriously delinquent (i.e., 90 days or more behind on payments). So while we account for some 23 percent of the market, we account for only about 10 percent of the serious delinquencies.
- We pay the loan servicing industry about $5 billion per year to service our loans. We offer additional financial incentives for servicers to avoid foreclosure.
- Through the first nine months of 2010, nearly 211,000 delinquent borrowers with Freddie Mac loans avoided foreclosure. That’s almost double the 114,000 foreclosures that took place.
- We expect servicers to treat borrowers fairly, with respect, and in full compliance with all applicable laws, regulations, and Freddie Mac policies. We have taken action when servicers have not complied.
- Borrowers are not being rushed through the foreclosure process. It takes 449 days, on average, to complete a foreclosure on a Freddie Mac loan. In these foreclosures, borrowers had been behind on their payments for an average of more than a year.
- Lengthy foreclosure delays impose losses on Freddie Mac and taxpayers: $10,000-$15,000 per year for every defaulted loan.
- Freddie Mac gives servicers the authority to stop or suspend a foreclosure action whenever there is opportunity for an alternative, such as a loan workout, short sale, or deed-in-lieu of foreclosure. Our servicers have had this authority for more than 20 years – and they know we’re committed to avoiding foreclosure.
To read more about Freddie Mac’s role in the mortgage origination, securitization, and servicing processes, see the recent testimony by EVP Don Bisenius before the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
* Anthony Renzi left his position at Freddie Mac in May 2012.
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