Freddie Mac Modifies Hurricane Relief Measures For Borrowers In Hardest Hit Gulf Coast Counties And Parishes
|August 7, 2006|
|Freddie Mac Bulletin, August 4, 2006 [pdf]|
McLean, VA – In the latest sign that Freddie Mac (NYSE: FRE) and the lending industry can support the Gulf Coast's post-hurricane repair and rebuilding efforts while gradually returning to normal business operations. The company today issued a Guide Bulletin to Seller/Servicers that modify a number of servicing and underwriting policies adopted after Hurricanes Katrina and Rita.
First, the August 4 bulletin gives lenders the authority to extend existing forbearances for up to an additional 90 days on a case-by-case basis once the year-old blanket foreclosure moratorium ends on August 31.
Lenders must still obtain Freddie Mac's prior approval before initiating any foreclosure actions and continue to provide relief options before pursuing a foreclosure, the bulletin says. The foreclosure moratorium applied to borrowers with Freddie Mac owned mortgages in the hardest hit Gulf Coast areas.
The new bulletin also extends a number of flexible underwriting policies to help borrowers whose incomes or credit were affected qualify for conforming, conventional Freddie Mac mortgages, including its Home Possible® suite of affordable mortgages.
"The blanket foreclosure moratorium and other relief policies we declared after Hurricanes Katrina and Rita has helped thousands of borrowers with Freddie Mac-owned loans cope with the financial aftermath of those storms," explained Janet Eakes, senior vice president of Freddie Mac's operations division. "While there is still much to do to in the Gulf Coast, more and more of it can be done as part of our mission to keep America's housing finance system stable, liquid and affordable for America's lenders and borrowers."
Freddie Mac's hurricane policies apply only in major disaster areas declared by the President where FEMA individual assistance is available. To better support borrower and community recovery efforts Freddie Mac classifies Gulf Coast counties and parishes by their degree of storm damage and adjusts its policies accordingly. Zone One counties have minimal damage, Zone Two moderate damage and Zone Three severe damage. (See table below for list of counties and parishes by zone.)
In addition, the August 4 bulletin extends through December 31, 2006 several temporary policy changes that provide flexible loan-to-value ratios and underwriting flexibility for borrowers whose credit reputation and capacity were affected by the storms.