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Saving the Family Home: A Hard But Vital Task

CEO Ed HaldemanAt the end of September 2009, about 5.6 million mortgage loans in the U.S. were at least 60 days delinquent. Put another way, some 5.6 million families were on the brink of losing their homes through foreclosure. That's a very troubling figure.

But foreclosure doesn't have to be the inevitable outcome of delinquency. By modifying mortgages – altering the terms of the loans to make them more affordable for struggling homeowners – we can keep many of those families in their homes. And we can help others avoid delinquency in the first place by making it easier for them to refinance.

The Obama Administration's Making Home Affordable Program is designed to do exactly that. With the economy distressed and millions of homeowners unable to make their mortgage payments, there's never been a greater need for this nationwide focus on foreclosure prevention.

While Freddie Mac owns 23 percent of all outstanding home loans, we own a far smaller share – just 9 percent – of the most seriously delinquent loans. But we have embraced Making Home Affordable and are playing a key role in helping families save their homes under the Administration's program.

Loan Modifications Help Families Keep Their Homes

Modifying a loan can be challenging. But because loan modifications are essential to stemming the tide of foreclosures, Freddie Mac has devoted tremendous resources to identifying and contacting homeowners who might qualify.

The result is that we've initiated well over 100,000 trial modifications through Making Home Affordable and helped another 96,000 borrowers stay in or sell their homes through our ongoing foreclosure prevention methods.

Over the past year, we've learned that our biggest challenge isn't necessarily getting a homeowner into a trial modification. It's guiding them through the full trial period and into a permanently modified mortgage. Sometimes that means tracking down a borrower who hasn't returned letters or phone calls sent by their servicers. Sometimes it requires helping a homeowner submit missing paperwork and sign all the right forms. So painstakingly, house by house, that's what we're doing.

It's well worth the effort. Borrowers who successfully complete a Making Home Affordable modification save an average of $576 a month – giving them much-needed relief in the short term and helping them keep their homes in the long term.

Making Home More Affordable Through Refinancing

What about the family that's paying its mortgage on time but can't refinance to a lower interest rate because, for example, their mortgage is "underwater" – that is, the value of the home has dropped below what the borrower owes? For them, the solution may be a refinance that lowers the rate, moves them out of an adjustable-rate mortgage to a fixed-rate mortgage, or lengthens the term on a fixed-rate loan.

As of September 30, Freddie Mac had helped 1.5 million families refinance their mortgages this year, reducing their annual interest payments by an average of more than $2,600.

Preventing Foreclosures Through Early Intervention

Freddie Mac is a longtime industry leader in identifying and addressing delinquencies before they become foreclosures.

This year, we've reached out more than 2 million times to our delinquent borrowers, and launched special initiatives to contact those most at risk of foreclosure. We've participated in more than 300 foreclosure prevention workshops, meeting with borrowers in 25 states. We've boosted our servicing staff by nearly 70 percent. And we're exploring other techniques – both on our own and in cooperation with housing organizations on the front lines in fighting foreclosures – to help families save their homes.

The work is tough, and no one is under any illusion that redoubling our efforts means the foreclosure crisis will suddenly disappear. But America's homeowners and their families deserve the very best efforts of their government and partners like Freddie Mac. And that's an obligation our company is working very hard to meet.

* Ed Haldeman left his position at Freddie Mac in May 2012.


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Our Executive Perspectives feature insights from company leaders on key trends in housing finance and how Freddie Mac is supporting the nation's housing recovery.

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