Freddie Urges 12-Month Forbearance in Flood Areas
Government-sponsored enterprise (GSE) Freddie Mac (FRE) said today it is extending mortgage relief to borrowers whose houses were affected by recent floods in Massachusetts, New Jersey, Rhode Island and West Virginia. Freddie is giving its servicers discretion to reduce or suspend mortgage payments for up to 12 months for borrowers with Freddie-owned mortgages, although each case must be individually assessed to determine the appropriate alternative. "Freddie Mac and the nation's mortgage servicers will work together to advance available mortgage relief to homeowners affected by these devastating floods," said Freddie Mac senior vice president of default asset management Ingrid Beckles. "We are instructing our servicers to work with borrowers with Freddie Mac-owned mortgages to receive forbearance on their mortgage payments for up to one year." Freddie is also encouraging its servicers to waive penalties or late fees on mortgages secured by flood-damaged homes, and to not report forbearance or delinquency to the national credit bureaus. Freddie also urged a suspension of foreclosure and eviction proceedings for up to 12 months on affected houses. The news comes after sister GSE Fannie Mae (FNM) said in early April it will continue to purchase mortgage loans secured by properties in flood-prone areas, despite a lapse in national flood insurance. The Federal Emergency Management Agency’s (FEMA) authority to issue policies under the National Flood Insurance Program (NFIP) ended on March 28th. Although Congress is expected to reauthorize the NFIP in the near future, FEMA cannot issue new policies or increase or renew coverage on existing policies in the interim. Write to Diana Golobay.