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FHFA Reports to Congress on Foreclosure Assistance

""Federal Housing Finance Agency"":http://www.fhfa.gov (FHFA) Director James B. Lockhart submitted the agency's first report to Congress yesterday detailing actions FHFA and the government-sponsored enterprises (GSEs) are taking to prevent unnecessary foreclosures.
""As housing prices have fallen, delinquencies on mortgages have tripled, not just for subprime and Alt-A, but also for prime mortgages,"" Lockhart said in his letter to the Senate Committee on Banking, Housing, and Urban Affairs and the House Financial Services Committee. ""Foreclosures have increased almost 150 percent from two years ago. Foreclosures hurt families, their neighbors, whole communities, and the overall housing market. We are committed to stopping this downward spiral,"" Lockhart wrote.
At the heart of their efforts to provide much needed foreclosure assistance, FHFA, ""Fannie Mae"":http://www.fanniemae.com, and ""Freddie Mac"":http://www.freddiemac.com, along with the ""Treasury Department"":http://www.treasury.gov and the ""Federal Housing Administration"":http://www.fha.gov (FHA) announced a simplified, streamlined loan modification program (SMP) last month, set to take effect December 15. The program is meant to reach as many seriously delinquent borrowers as possible to put them into more affordable mortgages and give them a chance to save their homes from foreclosure.
The streamlined modification program is also supported by the industry's ""HOPE NOW Alliance"":http://www.hopenow.com and its 27 servicer partners. Lockhart described the unified effort as ""a bold attempt to move quickly in defining a nationwide program beyond just Fannie Mae and Freddie Mac that can quickly and easily reach many of these troubled borrowers, thereby stabilizing those families and the communities and neighborhoods in which they live.""
The SMP will provide for a consistent uniform process which will lessen the time and
complexity involved in the traditional loss mitigation process, in which modifications are
designed on a case-by-case basis, Lockhart explained. In order to allow time for the implementation of the new program, Fannie Mae and Freddie Mac have also announced a suspension of foreclosures on owner occupied homes from November 26, 2008 until January 9, 2009.
In addition, Fannie Mae and Freddie Mac will continue to supplement the SMP with other loss mitigation programs presently in place and being adopted, Lockhart said. For example, both enterprises currently offer a short payoff loss mitigation option necessary to facilitate FHA's HOPE for Homeowners (H4H) Program. As another example, Fannie Mae offers Home Saver Advance loans - unsecured loans for delinquent amounts when the borrower can afford payments going forward - which have prevented close to 46,000 foreclosures through the third quarter of 2008, Lockhart explained.
Lockhart pledged that Fannie Mae and Freddie Mac will continue to accelerate their programs to reduce foreclosures on the 32 million mortgages that they own or guarantee. He said, as the industry leaders in setting standards for the mortgage market, he expects Fannie's and Freddie's programs to encourage other investors, servicers, and trustees to adopt more aggressive loan modification activities, as well.
Regarding specific stats on the delinquencies, loss mitigation actions, and foreclosure data reported by the two GSEs and their more than 3,000 approved servicers, FHFA was only able to provide aggregate data from the month of August, before Fannie and Freddie were placed under its control - figures that Lockhart said demonstrate the need for the enterprises to adopt more aggressive loan modification and foreclosure prevention activities. The number of foreclosures completed in August 2008 was 15,528, which is above the 2008 YTD monthly average of 12,701, Lockhart said. The number of loan modifications in August was 4,402, which falls below the monthly average of 4,959.
FHFA is a designated Federal Property Manager (FPM) in its role as conservator for Fannie Mae and Freddie Mac. The Emergency Economic Stabilization Act of 2008 (EESA) directs FPMs to develop and implement plans to maximize assistance for homeowners and encourage servicers of underlying mortgages to take advantage of programs to minimize foreclosures. Each FPM is also required to make regular reports to Congress on the number and types of loan modifications made and the number of actual foreclosures that have been carried out.
To access FHFA's full report to Congress, ""click here"":http://www.fhfa.gov/GetFile.aspxxFileID=196.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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