Fannie Mae and Freddie Mac will introduce new financial penalties and incentives to encourage mortgage servicers to pursue loan modifications and other alternatives to foreclosure, their regulator said Thursday.
For example, servicers that put together a completed loan-mod application package from borrowers within six months of the date a loan becomes delinquent will receive a $500 incentive, while those that do not meet the benchmark will have to pay a $500 compensatory fee. Fannie and Freddie also will offer servicers $400 to $1,600 in incentives depending on how quickly they complete a loan modification.
The penalties and incentives are part of a forthcoming set of uniform standards for companies that service loans for the government-sponsored enterprises. Edward DeMarco, acting director of the Federal Housing Finance Agency, said the updated guidelines will be given to servicers in the second quarter and would improve service to borrowers, provide more efficient processing of loan modifications and foreclosures and increase servicer accountability.
The changes come just two weeks after federal regulators issued consent orders against the top 14 mortgage servicers to overhaul their operations.
