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Freddie Mac to Allow Unemployed to Skip Mortgage Payments For Up to a Year

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In a new policy starting February 1, homeowners who lose their jobs will be able to skip payments on their loans backed by Freddie Mac for up to one year. This new policy is identical to one already in place with Fannie Mae. Freddie Mac and Fannie Mae own or guarantee more than half of all mortgages in the US. Both are currently under government conservatorship after nearly collapsing 3 years ago.

The new policy allows borrowers to skip payments for six months, and add on another six months with Freddie Mac's approval. The missed payments would be added on the loan balance unless the borrowers separately obtain a loan modification waiving that measure.

Even with the new policy, many people are still urging both Freddie Mac and Fannie Mae to lower the loan principal balance for distressed homeowners or "underwater" borrowers. Advocates of this policy believe that this will greatly reduce the risk of borrowers defaulting on their mortgages and encourgae people to remain current with their loans.

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