Freddie Mac: Mortgage Servicing ‘Will Never Be the Same Again’ « The Washington Independent
In April 2005, 64,057 homes received some form of foreclosure notice. This April — with the foreclosure crisis ebbing — 333,837 did. The recession has upended the logic of the entire housing market, with a quarter of homeowners underwater, the administration trying to keep real estate prices stable and the government a very lonely source of liquidity. And today, Ingrid Beckles, a senior vice president at Freddie Mac, writes that the company recognizes the sea change and is responding:
Mortgage servicing will never be the same again. The unprecedented volume of delinquent loans over the past three years has triggered within the industry a sweeping re-examination and re-engineering of its delinquency and loss mitigation management practices. While the ultimate impact of this incredible period of financial stress, distended unemployment and evaporating equity has yet to be fully revealed, I believe the way the servicing industry has responded will significantly enhance its ability to react expediently and comprehensively to future downturns.
Of course, the mortgage business should never be the same again, since the notion that home prices on aggregate would never decline was exposed as myth. Companies that originate and purchase mortgages, like Freddie, *should *have plans for what to do when the housing market goes south. But again, a Freddie executive walks through the new modification efforts without mentioning right-to-rent or principal reduction — two programs that offer a clear path to keeping people in their homes and preventing a further slide in housing prices.