Freddie Suspends Payments for Storm Victims

Freddie Mac has announced a three-month suspension of mortgage collections for mortgage borrowers in major disaster areas designated by the Federal Emergency Management Agency in the wake of Hurricane Katrina.Freddie said it is instructing its servicers to suspend mortgage collections for the months of September, October, and November. "This temporary suspension will apply to every borrower with a Freddie Mac-owned single-family mortgage in these FEMA-designated zones, regardless of the condition of their home," said Richard F. Syron, Freddie's chairman and chief executive officer. After the three months, servicers will have the discretion to continue suspending or reducing payments for an additional nine months on a case-by-case basis, depending on each borrower's circumstances, according to an advisory letter sent to Freddie Mac's 2,300 single-family servicers. Other newly announced policies allow servicers to return September mortgage payments that have already been made but not reported to Freddie; instruct servicers not to report to credit bureaus any reversed and suspended payments on Freddie-owned loans as a result of Katrina during the suspension period; and instructs them to suspend all late fees, collection, and foreclosure activities in the storm-affected areas during the suspension period.