Mortgage Giant Halts Foreclosures for the Holidays (Update 1)

Updated with Fannie Mae's similar announcement of a suspension of evictions during the holidays.

McLean, Va. ( TheStreet) -- Freddie Mac ( FMCC) on Thursday announced it would suspend evictions involving foreclosed residences from Dec. 19 to Jan 2, 2012.

The mortgage giant - which along with its sister company Fannie Mae ( FNMA) was taken under government conservatorship in September 2008 -- announced that it had "ordered all evictions involving foreclosed occupied single family and 2-4 unit properties that had Freddie Mac mortgages to be suspended from December 19, 2011 to January 2, 2012."

Tracy Mooney, Freddie's senior vice president of servicing, said that "If the property is occupied, our foreclosure attorneys will suspend the eviction to provide families a greater measure of certainty during the holidays."

The company said the suspension of evictions would "apply only to eviction lockouts related to Freddie Mac-owned repossessed properties and would not affect other pre- or post-foreclosure processes."

Fannie Mae followed up with later with its own suspension of evictions for the same period as Freddie, with Terry Edwards, Fannie's EVP of credit portfolio management saying that ""no family should have to give up their home during this holiday season," and that Fannie Mae is "committed to helping borrowers avoid foreclosure whenever possible and we encourage any homeowner who is having difficulty making their payment to reach out for help."

Freddie Mac last month announced a third-quarter net loss of $4.4 billion and said its regulator, the Federal Housing Finance Agency, would request a $6.0 billion "draw" from the U.S. Treasury, in part to make up its capital shortfall, and in part to pay the government $1.6 billion in dividends on previous borrowings. With the third-quarter draw, Freddie said its total borrowings from the U.S. government would increase to $72.2 billion as of Dec. 31.

Fannie Mae posted a $5.1 billion third-quarter loss and increased its government borrowings by $7.8 billion, to make up its own capital shortfall and in part to pay the Treasury $2.5 billion in dividends. Fannie said its total government borrowings would increase to 112.6 billion.

The FHFA in late October projected that combined government borrowings by Freddie Mac and Fannie Mae would ultimately "range from $220 billion to $311 billion."

The agency hopes to recoup some of the government-sponsored enterprises' losses, with its September lawsuits against 17 large banks -- including Bank of America ( BAC), JPMorgan Chase ( JPM), Goldman Sachs ( GS), Morgan Stanley ( MS), and Citigroup ( C) -- to demand full rescission and recovery of losses sustained by the GSEs from the purchase of nearly $200 billion in mortgage-backed securities from the banks.

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-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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