As key players in the administration’s Making Home Affordable Program to preserve homeownership, both Fannie Mae and “Freddie Mac”:http://www.freddiemac.com/singlefamily/2009-03-04mod_advisory.html have extended their suspensions of foreclosure evictions through the month of March. The GSEs have also instructed servicers not to complete foreclosure sales on any mortgages that may be eligible for the new federal loan modification program.

The government’s Home Affordable Modification Program will replace the GSEs’ Streamlined Modification Program (SMP) implemented last December. In an advisory to servicers, Freddie Mac said servicers should no longer solicit borrowers for a modification under the SMP, but instead should begin pursuing eligible borrowers who are 31 or more days delinquent for a modification under the Home Affordable Modification Program.
Freddie said, “This program offers a strong foreclosure prevention solution by expanding eligibility to borrowers who are delinquent as well as borrowers who are current, but in imminent danger of default.” But in its servicer advisory, Freddie said, “Servicers should not solicit borrowers for this program who are less than 31 days delinquent.”
The administration’s Home Affordable Modification Program is effective immediately for mortgages originated on or prior to January 1, 2009, and will expire on December 31, 2012. The workout program reduces homeowners’ monthly mortgage payments to no greater than 31 percent of gross monthly income. It requires HUD-approved counseling for borrowers with monthly total debt-to-income ratios of 55 percent or more, and it provides incentives to homeowners, servicers, and investors for successful modifications and ongoing timely payments.