Fannie, Freddie Do More to Prevent Foreclosures

Wall Street Journal (08/04/08) P. A3; Hagerty, James R.
Fannie Mae and Freddie Mac recently boosted fees paid to loan servicers for mortgage modifications, hoping to curtail foreclosures. Freddie Mac raised the fees for modifications to $800 from $400 and the fees for arranging short sales to $2,200 from $1,100, with comparable fees instituted by Fannie Mae. Meanwhile, Freddie Mac will give servicers in 21 states up to 300 days to orchestrate workouts to avoid foreclosure; observers note that the remaining states already have foreclosure processes lasting more than 300 days. According to Graham Fisher & Co. analyst Joshua Rosner, "It seems [Fannie Mae and Freddie Mac] would rather pay servicers to keep the losses rolling into the future even if close to a majority of borrowers redefault because they are unable to handle the mortgages."