Fannie Mae says it will begin fining loan servicers who take too long to complete foreclosures once it’s been determined that delinquent borrowers don’t qualify for a loan modification or other alternatives like short sales.
When fines are levied, they will be based on the outstanding principal balance of the mortgage loan, the rate of return paid to investors in mortgage-backed securities backed by the loan, the length of the delay, and any additional costs directly attributable to the delay.
Properties that are vacant and held off the market, combined with whatever portion of homes with delinquent mortgages that are not currently listed for sale, “represent a shadow inventory putting downward pressure on both home prices and rents,” Fannie Mae warned in the company’s most recent quarterly report to investors.
According to the report, 4.99 percent of the roughly 9 million single-family loans securitized into mortgage-backed securities guaranteed by Fannie Mae were seriously delinquent or in the foreclosure process as of June 30 — about 450,000 loans.
- Of those, about 170,000 were in foreclosure. About two-thirds of seriously delinquent loans had been delinquent for more than 180 days.
- In the first half of 2010, Fannie Mae’s loan servicers negotiated 276,059 loan workouts — more than three times as many as the same time period the year before.
- Fannie Mae’s loan servicers also signed off on 38,841 short sales and deeds-in-lieu of foreclosure during the first half of 2010, a 171 percent increase from the same period a year ago that nearly matched the total for all of 2009.
- Fannie Mae nevertheless acquired 130,767 properties through foreclosure in the first half of the year, up from 57,469 during the first half of 2009.
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