Because America is currently saddled with an unemployment rate of 8.5%, millions of homeowners are finding it increasingly difficult to keep up with their mortgage payments. However, there is some good news in the pipeline for those homeowners who got their mortgages through Freddie Mac. Freddie Mac recently announced that it will make it possible for unemployed homeowners to increase the period of time that their mortgage payments can be lowered or suspended. This latest offer increases the time period from 3 months to 6 months with the possibility of a one-year extension as well. Although it may not be a long-term solution, it will give some unemployed homeowners a bit more time to get back on track.
The mortgage giant also changed the rules for approving the right to halt loan payments to reduce the complication and speed up the process by eliminating the need for the companies that service Freddie Mac's home loans to get approval from Freddie Mac before helping out unemployed homeowners, and now enables those companies to approve the relief process on their own.
Unfortunately, given the current financial and economic conditions in the United States, it might take many unemployed homeowners a lot longer than 6 months to find a job and get back on their feet again. At least the new longer time period program is estimated to provide some relief for as many as 10% of Freddie Mac’s mortgage holders. The small bit of good news seems to be spreading though, as the other large government mortgage giant, Fannie Mae, announced it will be adopting a similar strategy of relief for unemployed homeowners in the near future.
In an upside down housing market, the attempts at temporary payment reprieves are akin to placing a band-aid on an amputation and will not stop the most of the bleeding for the millions of unemployed homeowners currently struggling to keep their homes. Instead of just a few months break from their existing mortgage obligations, what struggling homeowners really need is a quality loan modification that provides sustained financial relief over the long term. The effort to help out unemployed homeowners is a step in the right direction, and Freddie Mac should be applauded for its good intentions, but a lot more work remains to be done if the U.S. is going to be able to pull the housing market out of the slump it is in right now.
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