Freddie Mac is piloting a new workout program for high-risk loans designed to keep at-risk borrowers in their homes by employing third-party servicers that specialize in servicing Alt-A and other types of higher-risk mortgages.
Under the pilot program, a selected portfolio of higher-risk mortgages that are at least 60 days delinquent will be given to a specialty servicer for intensive attention using the full range of Freddie Mac workout opportunities, including the Streamlined Modification Program.
"A workout strategy is only as successful as the number of knowledgeable counselors available to answer the phone," says Ingrid Beckles, Freddie Mac's senior vice president of default asset management. "Our strategy for high-risk loans is designed to help servicers cope with today's unprecedented call volume by directing calls to a specialist with the specific staff and technical resources for handling a high volume of borrowers with these types of mortgages."
West Palm Beach, Fla.-based Ocwen Financial Corp. has been selected for the pilot and will deploy teams of counselors to handle Freddie Mac's delinquent high-risk mortgages in order to minimize telephone wait times, put borrowers in touch with live counselors and implement foreclosure reduction policies more quickly, Freddie Mac says. In December, the company reported that the 60-day delinquency rate for loans modified six months earlier stood at 24.6%.
"We applaud Freddie Mac's leadership in foreclosure prevention and are delighted to support this innovative initiative," says William Erbey, Ocwen's chairman and CEO. ‘We bring the technology and processes that now achieve successful workouts in the overwhelming majority of delinquent loans in our servicing portfolio."
Initially, the program will target an estimated 5,000 reduced-documentation loans in California, Nevada and other states with high delinquency rates. Although Alt-A loans represent a small portion of Freddie Mac's single-family portfolio, they account for half of its seriously delinquent mortgages.
Freddie Mac plans to determine whether to broaden or modify the strategy after reviewing the pilot's June results.
SOURCE: Freddie Mac