Freddie Mac and Fannie Mae, the mortgage-finance companies under federal control, are extending by one month a freeze on evictions for homeowners in foreclosure as delinquencies soar in a slumping economy.
Freddie, the second-largest source of U.S. home loan money, said it will allow renters in homes the company has repossessed to remain using monthly leases at market rates. Homeowners who have lost their houses to foreclosure also can rent the properties from the company at market rates, McLean, Va.-based Freddie said Friday in a statement.
The eviction suspension policies, extended to March, were set up to soften the effects of record foreclosures during the worst housing decline since the Great Depression. The mortgage financers have come under pressure from low-income housing groups to reverse policies of evicting homeowners and tenants after foreclosure.
Freddie's rental policy "is intended to help cushion the impact of foreclosure on families who own or rent homes" financed by the company, Freddie Chief Executive Officer David Moffett said in the statement. "At the same time, keeping foreclosed properties occupied and in better repair will support local property values and promote a faster recovery in the housing market."
Rent-to-own programsIn addition to extending its suspension on evictions, Fannie expects to soon announce new rent-to-own mortgage programs and efforts aimed at helping homeowners in foreclosure, Brian Faith, a spokesman for the Washington-based company, said in an e-mailed statement.
"Foreclosures, both across the country and in my home state of Connecticut, have shaken the very foundations of our communities," Christopher Dodd, chairman of the Senate Banking Committee, said in a statement Friday. "This decision will benefit neighborhoods and hard-working renters who pay their rent on time and were facing eviction through no fault of their own."
Both companies are still filing new eviction proceedings against homeowners in foreclosure and pursuing existing cases, according to Brad German at Freddie and Faith at Fannie.
The companies have halted through Feb. 28 the final steps to remove and lock people out of their homes as part of the moratorium.
Sales are suspendedThe government-sponsored enterprises, seized by regulators Sept. 6, suspended "foreclosure sales" and evictions Nov. 20 after regulators urged them to help struggling homeowners modify mortgages to reduce payments.
U.S. foreclosure filings jumped 81 percent last year amid falling house prices, stricter mortgage-lending rules and a deteriorating economy, RealtyTrac Inc. said.
More than 2.3 million properties got a default or auction notice, or were seized by lenders, the Irvine, Calif.-based seller of default data said Jan. 15. That's the most RealtyTrac has documented in four years of recordkeeping.
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