Freddie Mac to Extend Aid To Unemployed Homeowners
As a Jacksonville bankruptcy and foreclosure defense attorney, I get questions all the time about the availability of different government programs for those who recently lost their job and who are struggling to make their mortgage payment. One of the programs that the Obama administration created was the ability for homeowners who recently became unemployed to essentially suspend their home loan accounts with Freddie Mac.
Before the new policy, Freddie would allow its servicers to forbear or reduce payment amounts to recent unemployed homeowners for a period of about 3 months with a maximum of 6 months. Usually, that required the servicer to get Freddie's permission before the action could be taken. The response often took much longer than needed and homeowners continued to fall further and further behind until they were finally denied for the program. Now, the period of time has been extended to 12 months and servicers have much more discretion and are on a lighter leash than before with Freddie to approve or reject these applications. At the very least, this should speed up response time and let the homeowner know where he or she stands before leading them on for month after month. Fannie has indicated it plans to begin a similar program.
Unfortunately, many of the government programs designed to help struggling homeowners have failed and failed miserably. The policies look good on paper but just have not panned out the way lawmakers hope they would. For example, just before 2011 ended, the Florida mandatory foreclosure mediation program was discontinued because of the ineffectiveness of the program. The program was designed to help alleviate some of the backlog on court dockets, but in reality, very few modifications or settlements were reached. Time, expense and effort were exhausted to no avail. Does that mean banks are not willing to participate in any type of mediation? The answer in most cases is no. The banks will setup a type of informal mediation called a "conciliation." However, the homeowner must beware of certain bank gimmicks and tricks. Many times the banks will set these appointments up unilaterally without coordination with the homeowner or the homeowner's attorney. If the appointment is set on a date and time that is not convenient for the homeowner or the homeowner's attorney, then the appointment is missed. Then, the banks will claim to the Court that they acted in good faith all along and tried to resolve the issues when in reality it was a ploy to make it appear the bank was acting in "good faith."
In time, we have to be optimistic that our lawmakers will come up with a program that makes sense on paper and in its practicality. It is going to take a program that punishes banks for failing to cooperate and negotiate in good faith.
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Greg Gilbert
Keith Maynard
