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By January 5, 2011 0 Comments Read More →

Freddie Mac halts military service member foreclosures

Large numbers of American service members struggling to pay their mortgages will receive a foreclosure reprieve through 2011.

Freddie Mac in mid-December announced a sweeping foreclosure moratorium for service members who are released from active duty. They’ll get at least nine months of safety net, provided their mortgages are backed by the government-sponsored enterprise. In many cases such borrowers have financed a home under the VA mortgage program.

During that period, mortgage servicers cannot initiate or continue foreclosure proceedings against service members who meet the criteria. Freddie Mac officials hailed the temporary halt as a way to help service members stay in their homes.

“Our military make sacrifices every day to protect our homes and families,” Anthony Renzi, executive vice president of Single Family Portfolio Management at Freddie Mac, said in a news release. “This small act will protect financially troubled service members when they return from active duty by giving them more time to work with their lender to stay in their home.”

While mortgage servicers cannot move forward with foreclosures, they are allowed to apply an interest rate cap of 6 percent. The cap covers the service member’s active duty period and one year after his or her release from active duty.


The foreclosure moratorium comes on the heels of another GSE initiative to help struggling service members. Last September, Fannie Mae joined with some of the nation’s leading lenders to create special forbearance options for military members.

Under the Fannie Mae program, service members injured on active duty can have their mortgage payments reduced or eliminated for up to six months. The same measure will be in place for the families of service members who are killed in action.

Any veteran or active duty service member experiencing difficulties in making mortgage payments should contact their servicer as soon as possible. The Department of Veterans Affairs also has resources and counseling available, even for service members without VA loans.

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About the author: Chris Birk writes about real estate and the mortgage industry for a host of sites and publications, from Lenderama and Bigger Pockets to the Huffington Post and Motley Fool. A former newspaper and magazine writer, he is also content director for a leading VA lender. Follow him on Google+.

 

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