New Home Mortgage Servicer’s Guidelines Help with Foreclosure?

Fannie Mae and Freddie Mac are trying a new approach for companies that provide home loans. This is for the purpose of controlling the inefficiencies in the home finance system.

The Federal Housing Agency gave Freddie Mac and Fannie Mae directions to make guidelines for firms providing mortgage services. This is to control the blame to the servicers for their lack of effort to let the borrowers stay in their home and prevent foreclosures.

A lot of these mortgage services are being investigated by attorney general of the state for their participation in the failures and foreclosures in various mortgages.

These aligned approaches to servicing are aimed at helping reduce tax expenses of individuals who are suffering from billions of losses from the companies at the presently struggling housing market. Fannie Mae and Freddie Mac have been complaining about some delays and problems in their services that resulted to increased costs.

Some inclusions in the guidelines are incentives for services that will perform modifications for delinquent borrowers and sanctions for failure to meet specific goals. Moreover, the guideline prevents the servicers from considering foreclosures while the borrower can have the option of loan modification.

These changes can be used as a basis of regulators and lawmakers for the standards in nationwide servicing. These guidelines will be put to effect at the third or fourth quarter of the year said the FHFA.

Making these guidelines will be a huge task for Freddie Mac and Fannie Mae. The reason for this is that it will need a big amount from investors to finance 90 percent of loans and at least $5 trillion in mortgages. Fannie and Freddie works with at least 1,400 to 2,000 mortgage servicers said the spokesman of each of the two companies.

Freddie Mac further added that operational differences will show in the implementation of the guidelines. Bank of America Corp. JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, the major banks in the US are the biggest mortgage servicers today.

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