Foreclosure Alternatives

4. Among the foreclosure alternatives available, the one that will help the most people is probably the streamlined modification plan promoted by the Federal Housing Finance Agency (FHFA) and announced in November by both Fannie Mae and Freddie Mac for homeowners who meet eligibility criteria.

Keep in mind, that these agencies hold more than 50% of all the mortgage loans for US homes. The biggest thing to come out of this is that servicers are now allowed to make mitigation decisions. This means that servicers no longer have to wait for an answer from the lender to make a deal with you on your loan. Since 2007, Fannie Mae has already helped over 300,000 homeowners.

To help more homeowners, these agencies have employed more specialty servicers who are skilled in doing workouts of problem loans; they have opened offices in California and Florida which have a high percentage of problem loans; they are now providing incentives to foreclosure attorneys who reach out to homeowners and complete workouts instead of foreclosure; finally, they are even providing unsecured loans to homeowners so that they can make up missed payments.

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