The Feds recently adopted guidelines which will apply to Fannie Mae and Freddie Mac backed loans which are possible foreclosures. These changes may take effect as soon as the end of 2011.
The new guidelines will include the following:
Servicers may not apply the “dual track” tactic; that is to say a servicer may not both work with a borrower to avoid foreclosure while at the same time proceeding with a foreclosure.
Loan servicers must contact a borrower as soon as they enter the delinquent status with their loan and as long as both parties are showing “good faith” to resolve the issue a foreclosure may not be started.
Servicers must “formally” review each case before starting a foreclosure.
There will be rewards for fast loan modifications; the lender / servicer will receive $1600 for a loan modified in under four months, those that take longer will have reduced rewards.
If a foreclosure is already in process and the servicer works out a modification the servicer may still be eligible for a reward.
The entire modification process is being simplified with less forms and less red tape.
If you are a borrower / home owner and you are having trouble with your loan payments be sure to contact your lender, be proactive; you may be able to modify instead of allowing your home to go to a foreclosure sale.