Mortgage servicing innovations over the past 10 years have helped keep families of all income levels in their homes after a mortgage default has occurred, according to a new study by Freddie Mac.

Additionally, the study found, the earlier financially stressed borrowers start a repayment plan or negotiate a loan modification, the more likely they are to keep their home.

The study, by Freddie Mac deputy chief economist Amy Crews Cutts and George Washington University professor Richard Green, found that home-retention workouts such as repayment plans and loan modifications are very effective at keeping borrowers in their homes. Study results also showed that newly delinquent borrowers who previously went through a loan modification were less likely to lose their homes than those who were delinquent for the first time.

A loan modification is a change in one or more terms in the borrower’s loan that allows the loan to be reinstated and results in a payment the borrower can afford.

“The study validates that repayment plans work well, regardless of the income level of the homeowner,” Cutts said. “We found that repayment plans lower the probability of home loss by 80 percent among all borrowers and by 68 percent among low- to moderate-income borrowers.”

For servicers, foreclosure alternatives cost less than acquiring the actual property, which may carry legal and home repair costs, Cutts said. For borrowers, foreclosure alternatives help them keep their homes and avoid the trauma and financial hardships of losing a home.


Send tips or a Letter to the Editor to or call (510) 658-9252, ext. 140.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription