Freddie To Double Cash Incentives To Servicers Working With Delinquent Borrowers

Reuters reports:

• [F]reddie Mac, a government-chartered company, will [...] increase the time it gives servicers to negotiate with delinquent borrowers in Washington, D.C., and 20 states to 300 days from a range of 120 to 299 days, a spokeswoman said. The states are those with relatively fast foreclosure processes, Freddie Mac said.

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• Compensation to servicers that negotiate new payment plans and loan contracts will double to $500 and $800, respectively, Freddie Mac said. For a servicer that completes a so-called short-sale, in which Freddie Mac accepts a sale price on a home below the balance of the mortgage, payments also double, to $2,200. Accepting short sales can result in lower losses for lenders by ending the delinquency period and preventing ownership of the property through foreclosure.

• Among new incentives, Freddie Mac said it will reimburse servicers for the cost of door-to-door programs -- in which servicers seek out troubled borrowers in person to discuss renegotiating their loans -- if they result in the borrower contacting the servicer.

For more, see Freddie Mac boosts mortgage servicer incentives.