Government-backed mortgage companies Freddie Mac and Fannie Mae announced they will suspend foreclosures and the resulting evictions through the holidays, from Dec. 12 to Jan. 2. Execs at Freddie were the first to make the announcement at the beginning of the month, and managers at Fannie Mae followed suit short after, with both camps asserting a belief that no one should have to face an eviction during the holidays. The news comes as both mortgage giants suffer large losses and continue to draw fire for taking out loans from the U.S. Treasury to remain in operation. For more on this continue reading the following article from TheStreet.
Freddie Mac (FMCC) on Thursday announced it would suspend evictions involving foreclosed residences from Dec. 19 to Jan 2, 2012.
The mortgage giant – which along with its sister company Fannie Mae (FNMA) was taken under government conservatorship in September 2008 — announced that it had "ordered all evictions involving foreclosed occupied single family and 2-4 unit properties that had Freddie Mac mortgages to be suspended from December 19, 2011 to January 2, 2012."
Tracy Mooney, Freddie’s senior vice president of servicing, said that "If the property is occupied, our foreclosure attorneys will suspend the eviction to provide families a greater measure of certainty during the holidays."
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The company said the suspension of evictions would "apply only to eviction lockouts related to Freddie Mac-owned [repossessed] properties and [would] not affect other pre- or post-foreclosure processes."
Fannie Mae followed up with later with its own suspension of evictions for the same period as Freddie, with Terry Edwards, Fannie’s EVP of credit portfolio management saying that ""no family should have to give up their home during this holiday season," and that Fannie Mae is "committed to helping borrowers avoid foreclosure whenever possible and we encourage any homeowner who is having difficulty making their payment to reach out for help."
Freddie Mac last month announced a third-quarter net loss of $4.4 billion and said its regulator, the Federal Housing Finance Agency, would request a $6.0 billion "draw" from the U.S. Treasury, in part to make up its capital shortfall, and in part to pay the government $1.6 billion in dividends on previous borrowings. With the third-quarter draw, Freddie said its total borrowings from the U.S. government would increase to $72.2 billion as of Dec. 31.
Fannie Mae posted a $5.1 billion third-quarter loss and increased its government borrowings by $7.8 billion, to make up its own capital shortfall and in part to pay the Treasury $2.5 billion in dividends. Fannie said its total government borrowings would increase to 112.6 billion.
The FHFA in late October projected that combined government borrowings by Freddie Mac and Fannie Mae would ultimately "range from $220 billion to $311 billion."
The agency hopes to recoup some of the government-sponsored enterprises’ losses, with its September lawsuits against 17 large banks — including Bank of America (BAC), JPMorgan Chase (JPM), Goldman Sachs (GS), Morgan Stanley (MS), and Citigroup (C) — to demand full rescission and recovery of losses sustained by the GSEs from the purchase of nearly $200 billion in mortgage-backed securities from the banks.
This article was republished with permission from TheStreet.