GSEs Extend Moratorium; Another Bank Follows Suit
The government-sponsored entities Fannie Mae (FNM) and Freddie Mac (FRE) both announced late Friday they had extended the foreclosure and eviction suspension already in place through March 6. The moratoriums in place at the GSEs were first announced in November to allow time for the streamlined modification program to go into effect in mid-December. Then the GSEs extended the moratorium in early January and Fannie introduced an REO rental policy for tenants living in foreclosed properties. Then on Jan. 30, the GSEs extended the moratorium again, and Freddie announced its own REO rental policy. The announcement Friday marks the third extension of the foreclosure and eviction suspension, and means the backlog of homes not yet foreclosed on accounts for some three months of foreclosure and eviction inventory. The moratorium trend is catching on. On Thursday, the Office of Thrift Supervision director John Reich and Barney Frank both urged a temporary foreclosure halt until the foreclosure prevention plan announced by Treasury Department secretary Tim Geithner can go into effect. Citigroup Inc. (C) and JP Morgan Chase & Co. (JPM) on Friday took the advice, announcing a three-week moratorium on foreclosures. “We believe three weeks is adequate time for the Treasury to announce — and for us to implement — a new plan,” wrote JP Morgan CEO Jamie Dimon in a letter to Frank. Independent Bank Corp. (IBCP) also announced late Friday it was following the recent trend, suspending all foreclosures on first mortgage owner-occupied loans for the next three weeks to allow time for the proposed $50 billion foreclosure plan to be implemented. The Michigan-based lender -- and recipient of $72 million through the Treasury Department's capital purchase program -- said in the media statement it was pursuing loan modifications and work-outs in lieu of foreclosure on mortgages held in its portfolio. For those loans it services that are backed by the GSEs, Independent Bank cannot modify or alter mortgages without the permission of the GSEs, officials said in the media statement. "Our decision to suspend foreclosures is just one of the many ways that Independent Bank continues to work with customers to help them save their homes during these difficult times," said president and CEO Michael Magee. Write to Diana Golobay at firstname.lastname@example.org. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.