Mortgage financier Freddie Mac announced today that it was doubling the amount of compensation it pays mortgage servicers who help keep its borrowers out of foreclosure.
Beginning tomorrow, compensation for repayment plans will double from $250 to $500, while loan modifications will result in an $800 payoff, up from $400.
Freddie will also double the payout to servicers who successfully conduct a short sale, bumping the compensation up to $2,200 from $1,100.
Additionally, the GSE said it would reimburse servicers for door-to-door outreach programs such as the leaving of door hangers and door knocking that results in a borrower connecting with the loan servicer.
The company will also give borrowers more time to avoid foreclosure, bumping up the time frame from due date of the last mortgage payment to the time of the foreclosure sale to 300 days in states where the process is currently much faster.
“We are taking these steps because we want to reinforce the tremendous importance of workouts and reward their use,” said Freddie Mac Vice President of Servicing and Asset Management Ingrid Beckles, in a release.
“Giving our servicers more time and greater compensation to help troubled borrowers is fundamental to preserving homeownership and maximizing our efforts to minimize foreclosures.”
Freddie Mac’s single-family delinquency rate of 0.86 percent, while still relatively low, has doubled over the past 12 months, putting strain on the mortgage giant.
The new policies are effective from August 1 until March 31, 2009.