Senate to Fannie, Freddie: Freeze Foreclosures!
This week, several mortgage companies were placed under the control of government-backed enterprises Fannie Mae and Freddie Mac. And to provide the troubled borrowers with immediate relief, the Senate Banking Committee urge the two federal agencies to momentarily freeze foreclosures on these loans, for a minimum of 90 days.
By doing so, the distressed mortgage companies might have the chance to turn such non - performing loans and change them into performing assets. This will, most likely, minimize the losses incurred due to foreclosure. To accomplish this, the companies will have to modify the terms of the mortgages and ease some of their policies, in order to make it easier for the troubled borrowers to meet their obligations.
Many lawmakers have already pressed mortgage lenders to work with the borrowers by adjusting the mortgage loan terms and consequently, reduce balances. By doing so, they will be doing the whole nation a great favor.
Considering that Fannie Mae and Freddie Mac own almost 50 percent of the total residential mortgages – roughly amounting to $12 trillion, they can actually direct mortgage servicers to stop any foreclosure proceeding. For this reason, the Committee members strongly believe that these two federal agencies have the means to minimize the impact of the foreclosure crisis on the entire nation, particularly on the taxpayers.
Across the nation, millions of homeowners facing foreclosure are attempting to work out their mortgage problems with their lenders. Some of them are being assisted by foreclosure counselors who act as mediators. A growing number of defaulted loans have already been modified, allowing the homeowner to stay on their homes.
Many housing advocates have urged distressed homeowners to sit down with their lenders and discuss possible solutions so that both parties can avoid foreclosure. These options include repayment plan, loan modification, short sale, deed in lieu of foreclosure and in some cases, a bankruptcy.