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RISMEDIA, October 17, 2009—(MCT)—Freddie Mac is taking the Home Affordable Modification Program to the front door of borrowers who are even a little behind on their mortgage payments. 

Three months ago, Freddie Mac hired a firm, Home Retention Services Inc., to help overworked mortgage servicers process loan modification applications. Now government-controlled Freddie is going one better by hiring another company, Titanium Solutions, to personally visit delinquent borrowers to speed up the process to modify Freddie-backed mortgages. 

Freddie Mac holds 9% of the nation’s 4.2 million seriously delinquent mortgages, those that are at least 90 days past due. This effort is meant to get to those borrowers before they fall that far behind. “The statistics continually show that the earlier you intervene, the greater the likelihood for success,” said Freddie Mac spokesman Brad German. “We want to intervene early. We want to provide delinquent borrowers with the same attention and guidance that they got when they bought a home.” 

Titanium representatives plan to go to the homes of borrowers who are at least 31 days behind on a mortgage payment and who either haven’t responded to previous outreach efforts by servicers or those who have begun the process but need to provide more documentation for the application. They also aim to help homeowners who already have a trial modification under way get the paperwork done to receive a final modification. 

It’s an ambitious, aggressive effort that could do some good, particularly given the frustrations of the loan modification process, with borrowers sometimes kept on hold for an hour at a time during phone calls with servicers and crowding high school gyms, waiting hours to meet with servicers. But at a time when troubled homeowners are being taken advantage of, there’s cause for concern, too. 

Mortgage rescue scams are sweeping the country, as imposters knock on doors, promising troubled borrowers that they’ll save their homes, all for a fee. Freddie Mac says it’s taking steps to safeguard its latest effort. To lessen the chances of imposters pretending to be Titanium representatives, borrowers first will receive a letter, a sort of heads up that a visit is forthcoming. The Titanium representatives going door-to-door will be carrying a copy of the original letter from the servicer detailing the government’s mortgage modification plan. They’ll also know specific information that only a legitimate representative for a servicer would know, like the mortgage’s balance. 

Most important, since applying for HAMP is free, borrowers won’t be asked to pay any fees for the meeting or the assistance offered. 

Higher FHA down payments ahead? For months, local condo developers have lined up to get their projects approved by the Federal Housing Administration because a FHA-backed loan requires a down payment of only 3.5%. The low down payment, particularly attractive to first-time buyers, has resulted in plenty of FHA-backed home-lending. Now there’s a move afoot that might make FHA loans not quite as attractive to borrowers. Legislation recently introduced into the U.S. House of Representatives by Rep. Scott Garrett, R-N.J., would raise the minimum down payment to 5% and no longer allow the closing costs to be included in the FHA loan amount. 

In introducing the bill, the congressman said his goal was not to stymie homeownership efforts but to protect the FHA and ultimately, taxpayers. The bill comes a few weeks after the FHA announced that because of the mortgage crisis, its cash reserves had fallen below the level set by Congress. 

“As we have learned repeatedly throughout the mortgage crisis, the amount of equity a homeowner has in their home directly correlates to the credit risk associated to their mortgage,” Garrett said. FHA-backed loans, which accounted for only 5.5% of loans in 2007, rose to 19.6% in 2008 and now account for about 25% of mortgages. 

(c) 2009, Chicago Tribune.

Distributed by McClatchy-Tribune Information Services.