Many South Florida homeowners facing foreclosure may believe getting a preliminary loan modification offer from their lender will save them from losing their home. But new rules approved by Fannie Mae allow lenders to continue foreclosure proceedings on those who haven’t made a mortgage payment in more than 120 days.
Those homeowners are safe only when they go back to regularly paying their mortgage, which typically happens only after a permanent loan modification is in place.
Earlier this summer, Fannie Mae — which backs many mortgages in South Florida and across the country — ordered lenders not to start foreclosures on homeowners who are less than 120 days behind. Instead, lenders must offer loan modifications or other solutions.
But that’s not the case for those who are at least four months behind in their payments. Lenders can continue with the controversial “dual tracking” for them, so struggling owners can be paying in a trial modification program while going to court to fend off foreclosure.
With Fannie Mae’s backing, lenders won’t call off a foreclosure, until those homeowners prove that they can make the cheaper monthly payments, said Fannie Mae spokesman Andrew Wilson.
“We don’t want foreclosures to happen; we want to prevent them from happening, but at some point it becomes necessary to proceed with foreclosure,’’ Wilson said.
Under the new policies Fannie Mae adopted in June, lenders can be stricter with owners with more delinquent loans — and that includes tens of thousands of Floridians, with the state leading the nation with foreclosure cases.
About 149,000 Florida mortgagors were delinquent more than 90 days in the first quarter of this year, according to the Mortgage Bankers Association. A majority of the delinquent loans in the state are at least 90 days late, the association said.
In the past year, many South Florida homeowners have reported lenders have proceeded to foreclose on their homes, even though they have sought or secured preliminary loan modification agreements. Homeowner advocates have said many people may mistakenly believe such an agreement can save them from foreclosure.
Broward teacher Saint-Pierre Pierre, 40, is one of those late payers caught in what he considers a scary, confusing web involving Broward County foreclosure courts and his lender. He is making payments under a preliminary modification plan for his home in Pompano Beach. Meanwhile, he files court briefs on his own — he says he can’t afford an attorney — to fight off foreclosure. “I don’t want to walk away from my home,’’ Pierre said.
By Donna Gehrke-White
Sun Sentinel
Read more: http://www.miamiherald.com/2011/08/10/v-print/2354012/under-new-rules-loan-modification.html#ixzz1XkiLAFPa
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