Freddie Mac raises incentives for servicers to reduce foreclosures

In a bid to keep troubled borrowers out of foreclosure, Freddie Mac, the second-biggest provider of funding for U.S. residential mortgages is going to double the incentive it pays to mortgage servicers.

Mortgage servicers are companies that deal with the day-to-day management of mortgages.

The mortgage giant will allow the more time to negotiate in states with fast foreclosure procedures, will also reimburse servicers for the cost of door-to-door outreach programs and make administrative changes intended to streamline the workout process.

Freddie Mac wants to give the servicers more time and extra compensation so they can help the troubled borrowers, as they feel this will help maintain homeownership and keep foreclosures to a minimum, they also want to reward the servicers for workouts.

The current national delinquency rate for single-family mortgages is 6.35 percent, Freddie Mac’s current rate is far less at 0.86 percent, and these percentages are calculated by the mortgage bankers association of America.

Source: Forbes

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