If you have a Fannie Mae or Freddie Mac mortgage, the government has just made it easier for you to hold onto your home even if you're facing foreclosure. Fannie Mae foreclosure policies have been rewritten to offer buyers options - and to offer lenders incentives to make those options available to Fannie Mae buyers.
Among the special considerations that may be given in Fannie Mae foreclosure are dependent on the individual circumstances. If the buyer has suffered a "temporary setback" that has since been mended, then the options that can be exercised include:
* A repayment plan
The lender is encouraged to make arrangements for repayment of the past due amount or missed payments in order to bring the loan current. Generally, this takes the form of an additional amount due each month until the arrearage is paid off.
Fannie Mae foreclosure policy also encourages lenders to offer a 'forbearance' in the case of a difficult financial situation. A forbearance is a formal written agreement to suspend or reduce mortgage payments for a period of time to allow a borrower to resolve a financial circumstance. At the end of that period, the borrower must resume making regular payments, sometimes with an additional amount to make up the payments missed during the forbearance.
* Modifying the loan
Lenders are encouraged to do all they can to help clients avoid foreclosure, including modifying the loan. This may be an option if a client's circumstances have changed, but they are continuing to make payments and are otherwise good risks. Fannie Mae foreclosure policy encourages and offers incentives to lenders who are willing to modify loan terms to allow borrowers to remain in their home and continue making payments on it.
Sometimes, despite everyone's best efforts, the clients cannot afford to keep their home. In that case, Fannie Mae foreclosure policy is to assist the client to find a way to relinquish ownership of a home while avoiding foreclosure. Those may include:
* Allowing someone else to assume the loan. Not all loans are assumable, so check with the loan provider first. When a mortgage is assumed, the property is transferred to a new owner who takes over the payments on the existing mortgage.
* Another Fannie Mae foreclosure option is accepting the proceeds of a pre-foreclosure sale as full payment of the existing mortgage.
* The final option to consider as an avoidance of a Fannie Mae foreclosure is a Deed In Lieu of foreclosure, where the clients voluntarily give the deed to the lending company rather than being pursued for foreclosure.
Each of these Fannie Mae foreclosure options is meant to help Fannie Mae homeowners avoid the credit problems that come with losing your house to foreclosure. The goal of the agency is to help first time buyers and minorities purchase property - and hold onto it. For more information on Fannie Mae foreclosure and loans visit the organizations web site at www.fanniemae.com