Fannie Mae and Freddie Mac Blinked?

Written By: Glenn Michaels

Recently I wrote an article inquiring and asking if Hurricane Sandy Victims were going to be victims again.

The information is somewhat favorable for more than 38,000 mortgagors who reside in areas impacted by Hurricane Sandy. Previously it was pointed out that more than 38,000 mortgagors received six month forbearance agreements from their mortgage servicers for mortgages owned by Federal National Mortgage Association (Fannie Mae) and by Federal Home Loan Mortgage Corporation (Freddie Mac).

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Mortgagors who took these forbearance agreements were all ending and in the past both Fannie Mae and Freddie Mac required the mortgagor to come up with the shortfall and the current mortgage payment all in one payment. Many mortgagors could never come up with the required funds and very often placed in default status and were eventually foreclosed on.

This time due to the enormous amount mortgagors in New York, New Jersey and Connecticut and due to a lot of political pressure from the area’s Governor’s, Congressmen, and Senators Fannie Mae and Freddie Mac appears to have blinked and have come out with a new policy for these borrowers.

Fannie Mae and Freddie Mac are allowing these mortgagors to apply for mortgage loan modifications, short sales, and short payoffs if they can qualify for such programs.

As someone who attempted to obtain a mortgage loan modification, I wish them luck. The rules are confusing and often contradictory. Unless Fannie Mae and Freddie Mac makes some adjustments to the rules in obtaining a mortgage loan modification the default status and possible foreclosure action will just be delayed pending approval of the mortgage loan modification.

We now need some political pressure to have the rules adjusted so these mortgagors can qualify for the mortgage loan modification they so desperately need. The old rules for a loan modification should not apply for these 38,000 plus mortgagors. Their only “crime” is that they resided in area that was severely impacted by Hurricane Sandy.

As I travel around the impacted areas it is amazing to notice so many homes with dumpsters in their driveways, storage units on their front lawns as these homes are being restored. The six month forbearance and now the opportunity to apply for a mortgage loan modification still does not go far enough, but in some cases this the best help these mortgagors are going to receive as their insurance company and FEMA (Federal Emergency Management Agency) were slow in granting funds to restore their property.

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Another problem for Hurricane Sandy victims was the lack of speed for mortgagees in releasing insurance proceeds due to rules and regulations set forth by Fannie Mae and Freddie Mac. Once again with strong political pressure these rules and regulations were finally relaxed and mortgagors’ were finally receiving the insurance proceeds to restore their properties.


About The Author

Glenn Michaels - As an NAMP® staff writer, Glenn Michaels is a mortgage underwriting instructor for Mortgage Underwriter University (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years. If you're interested in becoming a writer for NAMP®, please email us at: contact@mortgageprocessor.org.


Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.