Mortgage Insurers Offer Relief For Homeowners Trapped In Depreciated Property

US mortgage insurance giants Freddie Mac and Fannie Mae are incentivizing homeowners to keep up with their mortgage payments in a recently announced policy.  The program is a relief package for homeowners who owe more on their mortgage than their homes are now worth due to the housing crash.  Supporters of the movement say the mortgage giants finally realize that millions of Americans are trapped in their homes due to circumstances beyond their control.

The new strategy allows homeowners who have made regular mortgage payments to walk away from the remainder of their home financing debts.  Freddie and Fannie will allow Americans who meet the criteria to apply for a deed-in-lieu transaction, which eliminates the outstanding mortgage balance on a home.  However, in agreeing to these terms, the property is forfeited to Fannie and Freddie, and homeowners are forced to move out.

The Center for American Progress supports the mortgage firms with this new policy.  Under previous relief packages, homeowners were forced to declare bankruptcy before receiving any relief on their home financing debts.  The Center has argued for years that millions of Americans have been stuck with depreciating homes due to the housing crash.  These homeowners are victims of the crash – caused by bankers and housing analysts – and thus, deserve relief on their mortgage payments.

The Center issued a statement in support of Freddie and Fannie, while encouraging policymakers to create more policies that help American families.

“There are a lot of families who need to move who can’t do it if they’re going to have debt hanging over their heads.  There’s no winner when someone is forced to default on their mortgage.”

The deed-in-lieu transaction will be available at the beginning of March.