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Freddie Mac Supports Housing Recovery

A printable version of '<a href='/corporate/company_profile/pdf/fm_housing_crisis.pdf'>Freddie Mac Supports Housing Recovery'</a> can be downloaded here.

During one of the worst housing and financial crises in decades, Freddie Mac is working to support the housing market and answer the nation's call to assist with its recovery. Freddie Mac's top priorities are providing essential liquidity to the market and helping to stem the foreclosure crisis. 

Providing Essential Liquidity

Throughout the downturn, Freddie Mac has continued to support the market by providing a stable source of home mortgage funding.  In fact, the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac provided approximately 77 percent of all the liquidity to the mortgage market in the second quarter of 2009.  Freddie Mac alone purchased or guaranteed $319 billion in mortgage loans and mortgage-related securities in the first half of 2009, helping to finance more than 1.2 million single-family homes and nearly 170,000 units of rental housing.  Furthermore, our presence in the market has helped keep mortgage rates low for homebuyers. 

Increasing Focus on Foreclosure Prevention

Using a variety of delinquency resolution methods, Freddie Mac helped more than 85,000 borrowers lower their mortgage payments, sell their properties or modify their loans to a more sustainable level in the first half of 2009 – compared to 88,000 for all of last year. Freddie Mac is proud to play a key role in sustaining homeownership by supporting President Obama's Making Home Affordable Program (MHA). At this critical time for the market and homeowners, the program is one more option that reinforces our long-standing commitment to help at-risk borrowers with Freddie Mac-owned mortgages avoid foreclosure.

The GSEs Provided 77% of the Liquidity to the Mortgage Market in the Second Quarter of 2009
The GSEs Provided 77% of the Liquidity to the Mortgage Market in the Second Quarter of 2009
Source: Inside Mortgage Finance

Keeping People in Their Homes Remains a Top Priority for Freddie Mac
Keeping People in Their Homes Remains a Top Priority for Freddie Mac
Source: Freddie Mac
*Home Affordable Modification program (HAMP) began in April 2009 

Mortgage Landscape

Delinquency rates are at historically high levels. At the end of June 2009, the U.S. had more than four million seriously delinquent mortgages – Freddie Mac holds 9 percent of these. So while we own approximately a quarter of all outstanding first home loans, we hold a disproportionately small percentage of seriously delinquent mortgages.

This is because Freddie Mac primarily operates in the conforming mortgage market – buying 30- and 15-year fixed-rate mortgages. While delinquencies are up across the board, the delinquency rate for subprime adjustable-rate mortgages is nearly eight times that of prime mortgages.

Supporting Making Home Affordable

In support of President Obama's Making Home Affordable Program, Freddie Mac implemented two initiatives in April 2009 that will help keep millions of families in their homes:

  • The Freddie Mac Relief RefinanceSM(HARP) Mortgage is a simplified refinance offering to help borrowers who are making timely mortgage payments but have been unable to refinance due to declining property values and tightening credit terms, refinance into mortgages that better position them for long-term homeownership success.  In June 2009, we modified HARP to give borrowers the ability to refinance a Freddie Mac-owned or guaranteed mortgage with any lender affiliated with Freddie Mac.  In addition, we raised the maximum loan-to-value ratios to 125 percent of the current value of the property effective October 1, 2009.  At the end of the second quarter 2009, Freddie Mac had refinanced approximately 29,000 loans under this program.

  • The Home Affordable Modification (HAMP) program is designed to help borrowers who are facing foreclosure, are delinquent on their mortgage payments or are current on their mortgage payments but in imminent danger of default, modify their existing mortgage into a more sustainable long-term payment option.  As of June 30, 2009, approximately 16,000 loans were placed in 90-day trial period payment plans under this program, and a substantially higher number have entered trial periods since that date.

The MHA program continues to ramp-up, and Freddie Mac is focused on helping borrowers understand their options and working with our Servicers to quickly increase their infrastructure and capacity.

In addition, Freddie Mac is serving as the compliance agent for MHA foreclosure prevention activities, with responsibility for evaluating and reporting on the compliance of Servicers with the program's requirements. We are also tasked with consulting and reporting to the Treasury on issues and lessons learned.

Playing a Leading Role in Foreclosure Prevention

Freddie Mac has been a leader in establishing and enforcing best practices and standards in foreclosure prevention for many years. We continue to enhance our longstanding programs to prevent foreclosures. Some of our most recent efforts include:

Key Initiatives

  • Suspended foreclosures on owner-occupied properties that are eligible for modification under Making Home Affordable.

  • Launched a rental initiative that allows former borrowers and existing renters to temporarily stay in their homes after foreclosure with month-to-month leases.

  • Introduced a new pilot workout initiative for high-risk loans designed to keep more at-risk borrowers in their homes by employing third-party Servicers that specialize in servicing Alt-A and other types of high-risk loans.

  • Launched the SmartBuy sales promotion, which offers two-year warranties to owner-occupants buying Freddie Mac HomeSteps® homes. This promotion is scheduled to run from July 17, 2009 to October 30, 2009.

The GSEs Hold a Disproportionately Small Percentage of the Nation’s Seriously Delinquent Loans
The GSEs Hold a Disproportionately Small Percentage of the Nation’s Seriously Delinquent Loans
Source: FDIC, Freddie Mac, Fannnie Mae, Mortgage Bankers Association, First American CoreLogic (LoanPermance); data as of March 31, 2009. Seriously delinquent loans are at least 90-days delinquent or in foreclosure. Components may not sum to 100% because of rounding. Freddie Mac and Fannie Mae figures include only whole loans and loans in structured transactions held in portfolio and in outstanding securities. 

 

Servicer Support

  • Increased our servicing staff by approximately 60 percent, including placing staff in our Servicers' offices throughout the country to help facilitate more loan workouts for troubled borrowers.

  • Increased foreclosure timelines in 20 states and the District of Columbia.

  • Standardized the foreclosure referral period for all mortgages to no later than the 120th day of delinquency.

  • Engaged Home Retention Services to help several regional servicers process thousands of additional applications for the Home Affordable Modification Program (HAMP) or other possible workouts. This helps Freddie Mac to expand outreach to thousands of additional homeowners and to fully support the enormous volume of HAMP inquiries going forward.

Borrower Outreach

  • Through our partnerships with the Consumer Credit Counseling Service and HOPE NOW, the number of borrowers that took advantage of free counseling services increased from 30 percent in 2007 to over 45 percent in 2008.

  • Stepped up our borrower outreach efforts and paid for counseling of over 16,000 delinquent borrowers in 2008.

  • Participated in borrower education seminars in more than 30 states nationwide in 2008 and we plan to support more than 150 borrower workshops in person this year.

  • Worked with national and local media to disseminate the latest in borrower options and programs and enhanced our online media room.

  • Created an automated loan look-up tool and an online resource center about foreclosure prevention at FreddieMac.com.

  • Shared information with the housing industry, including attorneys, real estate professionals, local agencies and consumer and civil rights organizations.

Freddie Mac Foreclosure Prevention Resources

For Consumers

  • Call Your Mortgage Lender Right Away! You can find your lender's phone number and your personal account number on your monthly statement or coupon book. Depending upon your situation, your lender may be able to provide you with options, such as forbearance, a reinstatement, repayment or loan modification. (The mortgage lender is also known as the "mortgage servicer.")

  • Freddie Mac: To find out if Freddie Mac owns your loan, go to www.FreddieMac.com or call us at (800) FREDDIE. If so, we can give you the information you need to get in touch with your mortgage lender.

  • CreditSmart® is our financial education curriculum (available in English, Spanish, Chinese, Korean and Vietnamese) that is designed to help you build and maintain good credit, make sound financial decisions and understand the steps to sustainable homeownership. FreddieMac.com/creditsmart

  • Buying and Owning a Home is our online guide to the homebuying process. It provides step-by-step information from preparing for homeownership to avoiding foreclosure. It also contains details on how to recognize the warning signs if you are having financial difficulty and how to work with your lender if you are having trouble making your payments. FreddieMac.com/avoidingforeclosure

  • Don't Borrow Trouble® is a national anti-predatory lending and foreclosure avoidance campaign that teaches you how to identify the signs of abusive or predatory lending, and then protect yourself and your home against it. Each local campaign provides a toll-free number that you can call for assistance or advice. FreddieMac.com/dontborrowtrouble.com

For Servicers

  • Avoiding Foreclosure Resource Center provides online information about workout options, alternatives to foreclosure, and resources to educate borrowers on foreclosure avoidance and mortgage fraud trends.

  • Avoiding Foreclosure Toolkit, an online toolkit to help servicers assist borrowers avoid foreclosure if they run into financial trouble. The kit includes customizable marketing materials to reach borrowers in five languages.

  • Servicing Section of the Freddie Mac Learning Center provides best practices, webinars and events for Freddie Mac Servicers. It also includes training in loss mitigation, foreclosure alternatives and solving default challenges.

  • Relief Options for Servicemembers describes ways to help military servicemembers on active duty avoid foreclosure through Servicemembers Civil Relief Act (SCRA) and Freddie Mac's policies.

Where to Get Additional Help


Updated: August 13, 2009

© 2009 Freddie Mac

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