Your Questions Answered
We didn't know what to expect when we launched the blog and invited your comments and questions. But we've been pleasantly surprised: it turns out that a lot of people are reading "Executive Perspectives." Not only that, you're sharing it with your colleagues and friends through Twitter and other social media.
And you're writing us back. Since the blog debuted, we've heard from homeowners, real estate professionals, housing counselors, mortgage lenders, and even our own employees. Many needed assistance resolving a specific mortgage problem, so we got them help. Other readers asked questions or offered their thoughts on issues we've covered in our posts.
As a direct result of your input, we're introducing a new feature on the blog called "Your Questions Answered." This is the first of several posts we'll publish this year in response to your feedback. Today, we're replying to comments and questions generated by three recent posts.
The Foreclosure Balancing Act
November 8, 2010
Question: As the owner of my home loan, I hope that Freddie Mac is sincere in its position to help homeowners save/keep their homes by making sure the servicers comply and not be too hasty to foreclose on peoples' homes when a modification would help. (Submitted by Lillie H.)
Answer: Freddie Mac is taking extraordinary steps to keep families in their homes. Depending on occupancy and the cooperation of the borrower, we don't require our servicers to begin the foreclosure process unless it's been at least four months since that borrower first missed a payment. Even then, if there's an opportunity to resolve a potential foreclosure – through a loan workout, short sale, deed-in-lieu of foreclosure, or other alternative – our servicers have the authority to stop or suspend a foreclosure action. And we urge them to do so. In fact, we pay financial incentives for each foreclosure alternative our servicers successfully arrange.
On average, foreclosing on a Freddie Mac loan takes almost 15 months to complete. The typical borrower has already been behind on their payments for more than a year. By its very nature, foreclosure is a lengthy, methodical process.
For families that can't afford to be homeowners under any scenario, foreclosure may be the only option. But those who can be helped should be given every opportunity to keep their homes. Since the start of 2009, we've worked with our servicers to help some 370,000 families avoid foreclosure.
Comment: You give three ingredients to affordability: prices, income, and rates. But prices are mainly a function of income and rates, and real incomes are down and perceived as falling, and rates are off their lows. Your outlook seems optimistic to me. (Submitted by David K.)
Chief Economist Frank Nothaft responds:
"While family income has declined from its peak and many have been severely impacted by extended periods of unemployment, it is also the case that house prices and mortgage rates have come down by a far greater extent, thereby actually increasing affordability. That is where the U.S. is positioned at the beginning of 2011: Homebuyer affordability is extraordinarily high – perhaps not as high as a couple months ago, but still very high. The concern for many hopeful buyers, however, is maintaining stable incomes in an uncertain economic climate, when many friends and family members remain underemployed."
Seven Facts About Freddie Mac and Foreclosure
January 3, 2011
Question: I just want to know how to get help with my mortgage. I keep calling my servicer and I'm not getting anywhere. (Submitted by John E.)
Answer: Don't give up – that's the most important piece of advice anyone can give you right now. You need to be persistent, and continue calling, emailing, and faxing your mortgage lender (also called "mortgage servicer") until you get your questions answered.
While we understand the sheer number of borrowers looking for help has overwhelmed some servicers, we pay the industry about $5 billion annually to service our loans and we have very high expectations of them. We're frustrated when we hear reports of unreturned phone calls, lost documents, or other delays – and we take action when servicers don't meet our requirements.
The Avoiding Foreclosure web page at FreddieMac.com provides resources to help you reach the right people, ask the right questions, and resolve your mortgage situation in a way that's right for your family. In addition, our loan look-up tool can tell you if Freddie Mac owns your loan. The website of the federal Making Home Affordable program is another helpful resource for borrowers looking for guidance.
Thank you to everyone who has taken time to write. Your questions, comments, and suggestions are important to us. Keep them coming.
Have a comment or question about this post? Email us to let us know what's on your mind.