Freddie Doubles Servicer Workout Incentives

Freddie Mac has announced that it is doubling the amount of money it pays mortgage servicers for each workout that keeps a delinquent borrower with a Freddie Mac-owned mortgage out of foreclosure. Freddie also said it will reimburse servicers for the cost of door-to-door outreach programs, give servicers more time to negotiate workouts in Washington, D.C., and 20 states with fast foreclosure processes, and make administrative changes to streamline the workout process. The government-sponsored enterprise said compensation for repayment plans will rise from $250 to $500 on Aug. 1, while loan modification compensation will increase from $400 to $800. For short sales or preforeclosure sales, where Freddie agrees to accept less than the full amount owed on a borrower's loan, compensation will go from $1,100 to $2,200. Freddie Mac also said that, through March 31, 2009, it will reimburse the cost of leaving a door hanger up to $15 per mortgage, and up to $50 per mortgage for a door knocking that results in contact between the borrower and the servicer. Freddie will also reimburse servicers up to $200 for additional fees paid to vendors for door knocking that results in successful alternatives to foreclosure.