Low mortgage rates and loan modification plans may not be enough mortgage relief for struggling Gulf coast borrowers. Freddie Mac said Thursday it was invoking a mortgage relief policy for borrowers hurt by the massive oil spill in the Gulf of Mexico, echoing similar moves by sister company Fannie Mae a day earlier. Housing expenses can be a growing concern, so by offering forbearance and home refinance incentives struggling borrowers may get the mortgage aid they need until things get better in the region. A massive oil slick spreading from a BP PLC deep water well has been distressing local economies along the Gulf Coast. Large swathes of the Gulf have been cordoned off from fishing and globs of oil on beaches threaten tourism dollars. Even some in Gulf oil industry have been diverted from normal work due to a moratorium of any deep water offshore drilling after a rig explosion started the leak.
Freddie said Thursday its forbearance policies let servicers suspend a borrower’s mortgage payments for up to three months or reduce payments for up to six months. They can recommend forbearance for up to 12 months, in some cases. As long as borrowers stick to their forbearance agreement, servicers must not accrue or collect late fees. “We are instructing our servicers to work with borrowers with Freddie Mac-owned mortgages to extend forbearance of mortgage payments where appropriate to help them stay in their homes as they navigate through this financial hardship,” said Ingrid Beckles, a Freddie executive in default-asset management.
On Wednesday, Fannie as well as Citigroup Inc. unveiled mortgage relief measures for troubled homeowners on the Gulf Coast. Fannie said it may suspend or reduce mortgage payments for borrowers whose properties or income suffer, while Citi announced a three-month suspension starting Thursday of foreclosure sales and notifications, and evictions on possessed properties for qualifying borrowers in the Gulf region with first mortgages held by CitiMortgage. Freddie shares were down 29% at 54 cents Thursday, continuing a drop from Wednesday when the company’s regulator told both Freddie and Fannie to delist from the New York Stock Exchange.
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