Freddie Mac Revises Delinquent Loan Guidelines |
| Wall Street Journal - Dec 10, 2007 |
Freddie Mac revised its mortgage-purchasing guidelines to allow more badly delinquent loans to remain in participation-certificates pools, which show partial ownership of participating capital, as the loan agency continues to grapple with losses related to the credit crunch.
The government-sponsored entity now buys loans from the pools once they are delinquent for 120 days. In the future, however, Freddie Mac said it will base purchase decisions on additional criteria, including whether the mortgages have been modified; a foreclosure sale occurs; the mortgages are delinquent for 24 months; or the cost of guarantee payments to security holders, including advances of interest at the security coupon rate, exceeds the cost of holding.
The agency said it changed its guidelines due to its belief that the historical practice of purchasing loans from PC pools at 120 days does not reflect the pattern of recovery for most delinquent loans, which more often cure or prepay rather than result in foreclosure.
Read Full Article from Wall Street Journal
- Posted: 2007-12-10 09:42:11
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