Freddie Mac To Use 3rd-Party Servicers For High-Risk Loans

   DOW JONES NEWSWIRES 
 

Mortgage-finance giant Freddie Mac (FRE) will begin using third-party servicers that specialize in servicing Alt-A and other types of higher-risk mortgages to advise homeowners in its latest effort to help keep at-risk borrowers in their homes.

The move comes on top of Freddie and larger rival Fannie Mae's (FNM) extension last week of their freeze on evictions - this time through the end of February - to give loan servicers more time to help financially strapped borrowers avoid foreclosure.

The mortgage giants were brought under government control in September in efforts to bolster the ailing mortgage market, which has been battered by souring home loans and falling residential real-estate prices.

Freddie and Fannie buy mortgages from the lenders that originate the loans. They package the loans into securities and sell many of those securities to other investors.

Under the latest new program, a portfolio of higher-risk mortgages that are at least 60 days delinquent will be given to a specialty servicer to look for ways to help avoid foreclosure.

The program will initially target about 5,000 reduced-documentation loans from California, Nevada and other states with high delinquent rates. Freddie, which said Alt-A loans - those between prime and subprime - account for half of its seriously delinquent mortgages, plans to review the results from the pilot program in June before deciding whether to expand it to other areas.

Last week, Freddie also announced a new program to grant month-to-month leases to certain former owner-occupants and tenants of foreclosed properties. There are currently 8,600 foreclosures in Freddie's pipeline.

-By Lauren Pollock, Dow Jones Newswires; 201-938-5964; [e-mail]

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