Freddie Mac Looks to 3rd Party Services for Loan Modifications

Freddie Mac (FRE: 0.52 -7.14%) said Tuesday that it is piloting a third-party servicing program for Alt-A and other at-risk nonperforming mortgages, called the Workout Strategy for High Risk Loans, that will see Freddie place certain loans with special servicers in an effort to implement more aggressive loss mitigation strategies.

Freddie Mac Streamlining Loan Modification Process

The move comes as some traditional mortgage servicers have run into problems quickly and completely implementing the recently-announced streamlined modification program, sources at various key banks have suggested to HousingWire.

The streamlined modification program (SMP), announced on Nov. 11 of last year, is aimed at borrowers who have missed three payments or more, own and occupy their primary residence, and have not filed for bankruptcy.

Ocwen Financial Corporation Selected for Freddie Mac Loan Mods

Under the new pilot, a selected portfolio of higher risk mortgages that are at least 60 days delinquent will be given to a specialty servicer for what the GSE characterized as “intensive attention,” including the use of the streamlined modification program.

Ocwen Financial Corporation (OCN: 9.19 -0.54%) is one of the servicers Freddie Mac has selected for the pilot, the GSE said; the subprime servicer has made headlines in recent months for comparatively heavy loan modification activity among the loans it services. Ocwen will deploy teams of specially trained counselors to handle Freddie Mac’s delinquent high risk mortgages in order to minimize telephone wait times, put borrowers in touch with live counselors faster, and implement the latest Freddie Mac foreclosure reduction policies more quickly, according to a press statement.