Fed Suspends Foreclosures During Holiday Season Until January 9

November 21, 2008 5:39 a.m. EST

New York, NY (AHN) - The beleaguered firms, Fannie Mae and Freddie Mac, have decided to suspend foreclosures during the holiday season until January 2009, an effort to help people to stay in their homes.

The two giant mortgage lenders said that Streamlined Modification program will continue with the recently introduced initiative to modifiy federal mortgage of hundreds of thousands of homeowners, who are behind on their payments.

"Until the streamlined modification program is fully implemented, we felt it was in the best interest of both borrowers and Fannie Mae to take this extra step to ensure that homeowners with the desire and ability to prevent a foreclosure have an opportunity to stay in their homes," Fannie Mae President and Chief Executive Officer Herb Allison said in a statement.

On Thursday, Fannie Mae said it issued a notice to its loan servicing organizations and retained foreclosure attorneys directing them to suspend foreclosure sales on occupied single-family properties as well as the completion of evictions from occupied single-family properties.

The properties to be foreclosed between November 26, 2008 until January 9, 2009 were suspended. The streamlined modification program is scheduled to launch December 15.

The companies said that the foreclosure attorneys and loan servicers will be able to use the additional time to reach out to homeowners who have defaulted on their loans and continue to pursue workout options.

Freddie Mac said it has informed its loan servicers and foreclosure attorneys to contact as quickly as possible an estimated 6,000 borrowers with foreclosure sales scheduled between the halt. While, Fannie Mae will reach out to the more than 10,000 borrowers the company estimates would be affected during this period.

"By working closely with FHFA and our servicers, Freddie Mac is on track to help three out of every five troubled borrowers with Freddie Mac-owned loans avoid foreclosure this year," Freddie Mac Chief Executive Officer David M. Moffett said in a statement. "Today's announcement builds on this momentum and provides a new measure of certainty to many of these families during the holidays."

By the end of this year, Freddie Mac said it expects to approve 84,000 workouts for the estimated 140,000 homeowners, who are delinquent on Freddie Mac-owned mortgages.

Fannie Mae and Freddie Mac, which support $5 trillion in home loans out $12 trillion in total, guarantee around 31 million mortgages that is almost 58 percent of all single family mortgages.