Letter: No 'balloon' for Sandy mortgages
We are disappointed that in its April 15 editorial "Sandy victims need this break," Newsday chose to mislead its readers into thinking that Fannie Mae and Freddie Mac are trying to force storm-affected homeowners into foreclosure or "balloon payments." This couldn't be further from the truth.
Immediately following superstorm Sandy, Fannie Mae and Freddie Mac announced a moratorium on foreclosures for homeowners affected by the storm and also offered them up to 12 months of payment forbearance. Despite Newsday's assertion to the contrary, borrowers who chose forbearance are not required to repay a lump sum immediately following the forbearance period. Instead, they have several options they can pursue, including a streamlined loan modification.
The goal in every case is to select a solution that works best for each individual situation and makes it possible for homeowners to resume paying their mortgages without an increase in their monthly obligations. What's more, streamlined loan modifications are essentially automatic and not the "pile of paperwork" that Newsday claims. Fannie and Freddie's guidance to mortgage servicers about this is very clear.
Payment shock doesn't benefit anyone, least of all homeowners who have already lost so much as a result of Sandy.
Editor's note: The writers are the deputy director, Division of Housing Mission & Goals, Federal Housing Finance Agency; senior vice president, Single-Family Servicing and Real Estate Owned, Freddie Mac; and executive vice president, Credit Portfolio Management, Fannie Mae.