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Government Intervenes To Lessen Home Loan Delinquencies

By Sally Maison
Published: Sunday, June 20th, 2010

72420481More credits are now available from Freddie Mac for delinquent homeowners. With the effort to save people from facing foreclosure, the Federal Home Loan Mortgage Corporation is now repurchasing home loans which are at least 120 days late.

Since the government will be spending on welfare and housing assistance for people who were displaced from their homes and who qualify for welfare, the government now wants to help these people in another way. Instead of just “curing” homelessness issues, Government Corporation Such As Freddie Mac hits the problem in the grassroots level in order to prevent the rise of people who get evicted from their houses. Thus this corporation repurchases loans to prevent foreclosure from happening.

Freddie Mac, along with its counterpart Fannie Mae, already consumed more than $145 billion in total costs for the repurchasing of home loans. The main criteria of both corporation is that the loan must be at least 4 months delayed in order to qualify in Freddie Mac’s home loan repurchasing program.

The 120 days minimum requirement is in place because this is the extreme deadline before any home loans are reclaimed by the bank or other loaning institutions. And in a span of 120 days, debtors who are not able to pay will most certainly have poorer credit score which may result to them being demoted to subprime lending. And if the government aims to minimize foreclosures, it will not allow people who are having financial difficulties to be further burdened by the higher interest rate of subprime lending.

With the Freddie Mac and Fannie Mae program in place, homeowners have a second chance of keeping their homes. Also, no commercial lender would also want to foreclose a house because they also lose money in the process. Therefore, this program benefits not only the homeowner but also the institution which issued the home loan to that person.

Since March, the rate of serious delinquencies has gone down to 5.47% and is continually going down as more homeowners are being helped by this program. Rest assured that the company is doing everything that it can do to make America foreclosure free in the coming years. Thought it will be a tough goal to keep up with, the loan corporation is already beginning to do so.

With this project, Freddie Mac hopes that it will lessen the number of people who lost their homes due to delinquent payments.

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