Categorized | Finance and Mortgage

Fannie Mae and Freddie Mac Asked to Halt Foreclosures in California

Please Share!

In an unprecedented move, the district attorney of California has filed a notion with Fannie Mae and Freddie Mac that calls for the two mortgage giants to allow for debt reduction on home loans, and ultimately cease the processing of foreclosures in the state of California.

 

She requested that any planned foreclosures be halted until policies regarding for the forbidding of debt reduction for those who owe more than their house is worth be properly addressed. California isn’t the first state to file a request with the two mortgage giants. They have faced constant pressure from around the United States to allow for principal reduction. Massachusetts has also filed a request.

 

The flood of requests has come in following the settlement regarding foreclosure abuse was announced. There has been a great fear that lenders will once again start to process foreclosures at a rapid pace to make up for the previous months during which their hands were tied.

 

Thus far, Fannie Mae and Freddie Mac have denied any possibility of debt forgiveness, citing the potential financial burden it would create for taxpayers.

 

While the most recent foreclosure abuse settlement provided for twelve million dollars in debt forgiveness in California, the ruling did not affect loans backed by Fannie Mae and Freddie Mac. Loans backed by both mortgage giants are not eligible for principal reduction, and thus, are likely candidates for foreclosure.

 

Rather than opt for debt forgiveness, Fannie Mae and Freddie Mac are calling for forbearance on the home loans they back. Forbearance would allow a portion of the debt to be suspended until the house is sold.

Please Share!

About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

Leave a Reply

Twitter Chat