Foreclosure Home News and Opinion Fannie, Freddie To Allow Deed-in-Lieu Program

Fannie, Freddie To Allow Deed-in-Lieu Program

Print Email
Comments Add Comment

For trapped homeowners unable to short sell or refinance their underwater home mortgages there may be a new option on the horizon.

Starting March 1, Fannie Mae and Freddie Mac will let some borrowers with certain hardships who kept up payments as their homes lost value erase their debts by giving up their properties in a so-called deed-in-lieu transaction, which wipes out the shortfall between a property’s value and size of its mortgage. The federal government will offer loan servicers $1,500, up from $275, for every deed-in-lieu completed, and will offer up to $6,000 to second-lien holders to expedite deeds-in-lieu.

To qualify for the program, borrowers must have a 55 percent debt-to-income ratio, meaning 55 percent of their monthly gross income goes to paying debt. Moreover, homeowners have to document a hardship, such as illness, unemployment, reduced income or divorce for Fannie and Freddie to consider the deal. For a deed-in- lieu transactions, servicers must confirm the property is being left in good condition. Borrowers have to fill out a five-page form to participate in the new deed-in-lieu program.

There are 10.9 million underwater properties, worth much less than the mortgages on them, according to RealtyTrac. The deed-in-lieu transactions, which require homeowners to leave properties in good condition, preserve the value of homes by preventing owners from abandoning them.

Related Articles

Is Now The Time To Buy a Foreclosure?
Agency Protecting Borrowers Dealt Blow
Why Mortgage Re-Defaults Are Still With Us


Print Email < Back to News & Opinion
Printed from www.RealtyTrac.com

Comments

STOP MESSING WITH THE MARKET. YOU ALREADY HAVE A SOLUTION FOR THAT CALLED A SHORT SALE INSTEAD OF HAVING THE SELLERS DEFAULT FIRST JUST GIVE THE SELLERS SHORT SALES OR PRINCIPLE REDUCTIONS PERIOD! STOP IT! Posted: March 6, 2013 by: PISSED OFF REALTOR

Add Your Comment

You must be logged in to leave a comment. Login | Register

Submit


Search News and Opinion