Mortgage financier Freddie Mac is piloting its new “Workout Strategy For High Risk Loans” designed to keep more of its most troubled borrowers in their homes.
Initially, the program will focus on an estimated 5,000 low documentation loans at least 60 days past due, in trouble states such as California, Nevada, and others with high delinquency rates.
Servicers will be given the full range of Freddie Mac workout options, including the Streamlined Modification Program developed with the Federal Housing Finance Agency and the Hope Now Alliance.
“A workout strategy is only as successful as the number of knowledgeable counselors available to answer the phone,” said Ingrid Beckles, Freddie Mac’s senior vice president of default asset management, in a release.
“Our strategy for high risk loans is designed to help servicers cope with today’s unprecedented call volume by directing calls to a specialist with the specific staff and technical resources for handling a high volume of borrowers with these types of mortgages.”
Freddie Mac noted that Alt-A loans represent a fraction of its single family portfolio, but account for half of its seriously delinquent mortgages.
Although sometimes difficult to define, Alt-A generally sits between prime and subprime, but can be designated as such for a myriad of reasons.