FREDDIE MAC RELAXES KEY POLICY TO EXPEDITE RELEASE OF INSURANCE PROCEEDS TO BORROWERS AFFECTED BY HURRICANES

McLean, VA – Freddie Mac today announced it is temporarily relaxing some of its guidelines in an effort to cut the time it takes the nation's mortgage servicers to get insurance money into the hands of borrowers who have suffered property damage in locations declared Major Disaster Areas because of hurricanes Charley or Frances or Tropical Storm Bonnie. Getting funds into borrowers' hands more quickly will help them compete more effectively for contractors, building materials, and other scarce resources.

Under the new temporary guidelines, mortgage servicers can immediately release insurance funds made payable jointly to an insured borrower and the servicer. The amount can equal the highest of:

$20,000;
One-third of the amount of the insurance draft;
10 percent of the affected mortgage's unpaid balance;
The amount by which the released funds exceed the unpaid balance of the mortgage.

To advance funds using these temporary guidelines, a mortgage must be current and a borrower's payment history must not indicate delinquencies of two payments or more.

"Temporarily relaxing these insurance loss requirements is absolutely the right thing to do," said Freddie Mac Senior Vice President Mike May. "This is a critical policy change that we believe will not only help families recover more quickly from this year's disastrous wave of hurricanes, but will also help our Servicers to better cope with the extraordinary demands these storms are placing on their resources."

In addition, Freddie Mac is continuing to urge servicers to provide borrowers affected by hurricanes Charley or Frances with relief through the company's disaster relief guidelines. Under these guidelines, impacted borrowers whose mortgages are owned by Freddie Mac may qualify to have their mortgage payments reduced or suspended for up to 12 months. Each case will be individually assessed to determine which relief alternative will best fit the homeowner's circumstances.

Freddie Mac is also strongly encouraging mortgage servicers to waive the assessment of penalties or late fees against borrowers with disaster-damaged homes and not report forbearance or delinquencies caused by the disaster to the nation's credit bureaus.

For more information on mortgage payment relief, homeowners should contact their mortgage servicer – the company to which they send their monthly mortgage payment – or call Freddie Mac at (800) FREDDIE.

Freddie Mac is a stockholder-owned corporation chartered by Congress in 1970 to create a continuous flow of funds to mortgage lenders in support of homeownership and rental housing. Freddie Mac purchases mortgages from lenders and packages them into securities that are sold to investors. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than two million renters across America.

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