Fannie, Freddie Quietly Lift Moratorium on Foreclosures

[girl gone mad]

For the record, I actually don't view this as a negative development. While foreclosure is painful and disruptive in the short term, in the long term it is often the best solution for struggling homedebtors. Keeping people in homes they can't afford is not a realistic goal and in the end attempts to do so will only prolong the slump. That's why I opposed a homeowner rescue program that didn't include provisions for reducing principal. Unfortunately, our blue dog coalition threatened to block the rescue bill unless it included a compromise that gave preference to reducing interest over reducing principal. I think that will ultimately limit the effectiveness of the loan modification programs. But, again, what's in the banks' best interests is not the same as what's in the homeowners' best interests. The wealthy have no qualms about http://www.finalternatives.com/node/7478">defaulting on loans when economic circumstances turn against them.

Fannie, Freddie Quietly Lift Moratorium on Foreclosures
http://washingtonindependent.com/37160/fannie-freddie-quietly-lift-moratorium-on-foreclosures

A ban on foreclosure sales and evictions from houses owned by mortgage giants Fannie Mae and Freddie Mac, which began as a high-profile effort just before the holidays to keep people in their homes as the government tried to come up with homeowner rescue plans, is over.

Spokesmen for Fannie Mae and Freddie Mac confirmed the ban ended March 31, in a response to an inquiry from TWI. The agencies made a major announcement in November to roll out the ban, garnering headlines and extensive news coverage. Freddie Mac CEO David Moffett issued a statement at the time, saying the ban “provides a new measure of certainty” to families facing foreclosures during the holidays.

But its expiration didn’t seem to merit the same level of fanfare, with some housing advocates caught by surprise, scrambling for information today and Wednesday on listservs and in phone calls.

Danilo Pelletiere, research director for the National Low Income Housing Coalition, said the ban’s eventual expiration wasn’t unexpected - but it also wasn’t clear specifically when it was supposed to end. Some housing attorneys and advocates were confused because they were in the middle of cases that would be affected by the expiration. Fannie and Freddie have repeatedly extended the ban, which was originally expected to expire on Jan. 9.

Fannie Mae said in a brief statement from spokesman Brian Faith that “Fannie Mae’s suspension of foreclosure-related evictions concludes as of March 31, 2009. The company has in place special foreclosure sale requirements that take into account the Making Home Affordable program. A foreclosure sale may not occur on any Fannie Mae loan until the loan servicer verifies that the borrower is ineligible for a Home Affordable Modification and all other foreclosure prevention alternatives have been exhausted.”

Since the ban started, both Fannie and Freddie have developed rental programs to keep tenants from being evicted from foreclosed properties owned by the two agencies.

In addition, the Obama administration in March unveiled its plan to help troubled borrowers either refinance their homes or modify their mortgages.

Housing advocates aren’t exactly cheering about the ban being lifted. But they are hoping the new programs succeed, and plan to keep a close eye on their progress, Pelletiere said.

The lifting of the ban will be a testing ground for the administration’s approach to foreclosures. A bill to allow bankruptcy judges to modify mortgages has stalled in Congress. Money from the Troubled Assets Relief Program has gone to banks and bailout efforts. The ban, enacted as foreclosures soared and the holidays approached, was the government’s first dramatic step to help homeowners. The housing rescue plan was developed and announced only after the Treasury Department first unveiled its plan to buy toxic assets from banks.

“A perpetual moratorium is not a solution to how we do foreclosures in the future,” Pelletiere said. “It’s a holding pattern. We need to break that holding pattern to allow for something else positive to happen.”

[annabanana]

1. I hope that the "Making Home Affordable" programs

help a lot of the people caught up in this mess. I wish that more had been done before restarting evictions...

Are bankrupcy judges allowed to order changes to mortgages? Did they ever get "cram down" authority? (gawd I hate that framing)

[girl gone mad]

2. It's still in the senate.

http://www.govtrack.us/congress/bill.xpd?bill=h111-1106

Not as good as it could have been, but it will include cramdowns.

[Pale Blue Dot]

3. I agree, ggm.

We, as a country, have to face the debt problem. Things will get worse and worse until we do.

[teenagebambam]

4. Been trying to get my loan servicer (Bank of America)

to talk to me for six months. Haven't paid my mortgage for three. Maybe now that Freddie's moving, they'll answer a f***ing phone call.