Helping borrowers avoid foreclosure – the basics

At this critical time for the market and homeowners, we’re with you every step of the way, responding to our shared market challenges with options to help homeowners keep their homes whenever possible during financial hardships. Our default management policies provide you with clear and sound guidance, and offer you many options to explore with borrowers. Here is a quick refresher of important points to remember while helping borrowers who are in default.

What if a borrower cannot pay their mortgage?

• Is the borrower the victim of a natural disaster? If the property has been damaged or destroyed by a tropical storm, hurricane, tornado, flood or other natural disaster, follow our guidelines for disaster relief.
• Is the borrower a service member on, or recently released from, active duty? There are special financial relief options in place for servicemembers through the Servicemembers Civil Relief Act (SCRA) and Freddie Mac's own policies.
• Is the borrower eligible for a reinstatement, relief option, or workout? By exploring options and working with the borrower, you can usually find a positive outcome. Relief and workout options can help borrowers reinstate their mortgages and remain in their homes, avoid foreclosure, and reduce the impact of delinquency on their credit rating.
• Review the Guide and our default management quick references, best practices and publications and determine if the borrower is eligible for a partial or full reinstatement, repayment plan, short- or long-term forbearance or loan modification.
• Refer borrowers who are in default to our avoiding foreclosure Web page so that they can learn about foreclosure alternatives.

What if a borrower can no longer afford to keep their home?

• Is the borrower eligible for a workout mortgage assumption, make-whole preforeclosure sale, short payoff or deed in lieu of foreclosure? Not every borrower who is experiencing financial hardship can retain ownership of his or her home. When a borrower cannot or does not want to keep their property, you can help the borrower understand the benefits of selling their property, avoiding foreclosure and preserving his or her credit rating.
• Review our Guide, default management quick references, best practices and publications and determine if the borrower is eligible for a workout mortgage assumption, make-whole preforeclosure sale, short payoff or deed in lieu of foreclosure.
• Refer borrowers to our avoiding foreclosure Web page so that they can understand foreclosure alternatives.

We reward you for helping borrowers

Our Workout Incentive Program rewards you for the hard work you do to find the right solution for a borrower. The program is designed to

• Reward you for pursuing workouts and repayment plans
• Complement our array of cutting-edge default management tools
• Encourage you to aggressively pursue alternatives to foreclosure

Put our free, professionally developed materials to work for you

We’ve created tools – in five languages – to help you let borrowers know to call you early and first if they begin having difficulty with their mortgage payment. These materials are on our Website, ready for you to download, customize with your own contact information and logo, print and use.  This essential toolkit includes a downloadable brochure, statement stuffers, and posters, for you to

• Post or distribute in your lobby, at home fairs and community events.
• Insert into teller envelopes and monthly statements.
• Run ads in local papers and magazines.

Visit our online Avoiding Foreclosure Toolkit and download your free Avoiding Foreclosure materials.