In an effort to fix problems identified during the foreclosure crisis, the Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to align their guidelines for servicing delinquent mortgages they own or guarantee. The new guidelines end the process of dual tracking modification efforts and foreclosures and require servicers to reach out to borrowers immediately when they become delinquent and emphasize efforts on remediating the delinquency. Under the rules servicers must formally review each case to ensure a borrower has been considered for foreclosure alternatives before the loan is referred to foreclosure. Further, to encourage modifications, servicers will be given financial incentives to modify loans.
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