Two key lawmakers have asked the federal housing agencies to persuade loan servicers to cut some slack for furloughed government workers who miss mortgage payments.
In identical letters sent Dec. 28 to the chairmen of Fannie Mae and Freddie Mac, House Banking Committee Chairman Jim Leach urged that the workers be "protected from unintended consequences of the budget impasse."
The same day, Rep. Rick Lazio, chairman of the banking panel's housing subcommittee, urged Housing and Urban Development Secretary Henry Cisneros to extend forbearance to borrowers whose mortgages are held in Ginnie Mae pools.
The lawmakers were responding to the second government shutdown in six weeks. Tens of thousands of government workers have been left without paychecks because Congress and the Clinton administration are logjammed over the budget.
Observers don't expect the budget impasse to drive up delinquency rates dramatically. Even so, federal employees run the risk of missing payments, forcing lenders to decide what actions, if any, to take.
Lawmakers "send out similar letters for natural disasters, so I guess they put this in the same category," said Brian Chappelle, staff vice president for the Mortgage Bankers Association of America.
In his letters, Rep. Leach asked Fannie and Freddie - formally the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. - to advise companies that collect and process mortgage loan payments of options for dealing with delinquent borrowers.
Specifically, he said, the agencies should instruct servicers to consider borrowers' attitudes toward the debt and the reasons for missed payments before declaring accounts in default.
John Gibbons, a senior vice president at Freddie Mac, said that when it received Rep. Leach's letter it was already notifying servicers that relief is warranted under existing guidelines.
A spokeswoman said Fannie Mae would decide this week how to proceed with Rep. Leach's request. "We are very sympathetic to the situation and will address the request," she said.
Representatives from Ginnie Mae - a unit of HUD that is formally known as the Government National Mortgage Association - could not be reached; they are on furlough as part of the government shutdown.
Lenders, meanwhile, said they have already snapped into action. GE Capital Mortgage got hold of the lawmakers' letters on Dec. 28. It immediately undertook a case-by-case review of defaults by federal employees, a spokeswoman said.
Capstead Mortgage Corp. said it is prepared to extend forbearance to customers who ask for extra time to make payments, said Bill Ruduff, executive vice president of servicing.
Some banks have begun broader programs to help federal workers through thin times. United Jersey Bank, for instance, is offering unsecured personal loans to people furloughed from the Social Security Administration.
