Mortgage giant Freddie Mac recently informed its residential mortgage servicers that those who are unemployed may be allowed as much as 12 months of forbearance on their mortgages.
The increase of forbearance was initially directed by the Federal Housing Finance Agency, and has a starting date of February 1, according to the release. This will allow mortgage servicers to approve as much as six months of forbearance without Freddie Mac needing to give approval. If the servicer receives Freddie Mac's approval, the amount of time could increase to one year.
"These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies, said Tracy Mooney, senior vice president of single-family servicing and REO for Freddie Mac. "We believe this will put more families back on track to successful long-term homeownership."
Freddie Mac hopes that the increased flexibility will reduce delinquencies and residential foreclosures caused by longer-term unemployment.