Unemployed borrowers who hold a mortgage backed by Freddie Mac may soon be offered home loan relief.
Starting February 1, 2012, the mortgage giant will now be able to approve unemployed borrowers to receive up to six months of forbearance without receiving prior approval. Meanwhile, borrowers who did receive approval may be eligible for an additional six months.
"These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies," said Freddie Mac senior vice president of single-family servicing and REO Tracey Mooney. "We believe this will put more families back on track to successful long-term homeownership."
In coordination with the Federal Housing Finance Agency, Freddie Mac will also be able to reevaluate delinquent borrowers who currently have a short-term forbearance plan to see if they may be eligible for an extended timeline.
Prior to the announcement of these changes, Freddie Mac only allowed servicers to grant up to three months of forbearance to delinquent homeowners that had provided no payment or prior approval. However, for borrowers who received permission and would provide reduced monthly payments, they had a maximum of six months.
Only under special circumstances, such as natural disaster, disability or long-term medical treatments, could borrowers receive more than the allotted six months.
Recent statistics from the government-sponsored enterprise note that approximately 10 percent of all delinquent borrowers with Freddie Mac mortgages are a result of unemployment.
However, despite Freddie Mac extending forbearance for a longer period of time to unemployed borrowers, the Labor Department recently announced that the national unemployment rate fell to 8.5 percent in December. The rate is now the lowest it has been in nearly three years.
"Part of the improvement in the labor market may be due to warm weather in much of the country that distorted normal seasonal patterns in some industries, but combined with improvement in other recent indicators, including home sales, this report shows the economy is entering 2012 with some wind at its back," said Fannie Mae chief economist Doug Duncan.
Additionally, the report states that the economy added 200,000 jobs last month - most notably in the transportation and warehousing, retail, manufacturing and healthcare sectors.