Freddie Mac wants mortgage servicers to use funds from an underutilized federal program to help homeowners through short sales and other foreclosure alternatives.
The mortgage giant, in a letter to its servicers Monday, said they now must participate in Hardest Hit Fund transition assistance programs from 18 states and the District of Columbia.
The directive, issued Monday, is effective immediately.
The requirement applies to borrowers for short sales, deed-in-lieu deals or relocation assistance, but only if they don’t interfere with Freddie rules.
The letter to mortgage servicers comes as Freddie and Fannie Mae put a heavier emphasis on short sales. The two government-sponsored enterprises issued guidance a week earlier to speed up responses to these deals.
It also comes less than two weeks after a report, from the Special Inspector General for the Troubled Asset Relief Program, said just 3% of HHF’s $7.6 billion fund had been used as of Dec. 31. The Treasury Department meant for the program to provide modifications, short sales, unemployment assistance and principal reduction.
Freddie also told servicers it would release a new interest rate for standard modifications on June 1 to be used starting July 1. A senior official said last week that Freddie will lower the rate to 4.625% from 5%.
Adjustments in the interest rate will be published on Freddie’s website.