The move is part of an effort to sell off even more nonperforming loans than the Federal Housing Administration, which manages Fannie and Freddie, had originally planned.
San Francisco, CA (PRWEB) November 08, 2012
Speaking in a recent housing conference in Baltimore, Mary Miller, Treasury Under Secretary for Domestic Finance, spoke about a new plan. She explained that the government is seeking to help the two government-sponsored agencies which handle mortgages – Fannie Mae and Freddie Mac – to sell off a greater proportion of their delinquent loans.
"The government is seeking expedited sales, in an effort to greatly limit the level of risk at Fannie and Freddie," Miller commented. "The objective is to wind down the portfolios at the two agencies so that they can be thoroughly reformed in the coming year," Miller added.
Miller said, in her remarks at the conference, that she wants the agencies to target investors who seek to purchase these loans, and to optimize this process by working with so-called “special servicers,” companies that focus on managing such loans.
The move is part of an effort to sell off even more nonperforming loans than the Federal Housing Administration, which manages Fannie and Freddie, had originally planned. The agency had determined to sell off 5,000 mortgages each quarter beginning this September, but has since raised that amount to a total of 15%, amounting to a value of $500 billion. There are a total of 1.7 million loans delinquent at Fannie and Freddie at last count.
Regular servicers do not have the experience of special servicers in taking the special steps involved in bringing delinquent loans to the table and getting them into the hands of investors, Miller pointed out. Several such servicers are already at work with the government-sponsored agencies, but Miller seeks to increase the coverage.
"We hope for positive outcomes for individual borrowers as well as for local housing markets that should see fewer properties going into foreclosure," Miller added.
Special servicers are also working closely with banks to help sell off an estimated 300,000 mortgages identified under the $8.5 billion faulty-loan settlement. The settlement adjusts financial incentives to encourage special servicers to find out how much borrowers can afford to pay on loans, or to hasten foreclosures if they can't reach a deal. The Special Servicers are also adept at reselling loans in note form offmarket to private investors.
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