Freddie Mac offers carrots for short sales, loan workouts
Freddie Mac is doubling the amounts paid to loan servicers who are able to engage in workouts with borrowers that help them avoid foreclosures. Some critics have said that because of the way they are compensated, loan servicers often won’t put in the time and expense required to craft repayment plans, loan modifications or engage in short sales. Freddie Mac announced today it will double compensation for servicers who close short sales or pre-foreclosure sales to $2,200. Compensation for loan modifications is being increased from $400 to $800, and servicers who draw up approved repayment plans will be paid $500 instead of $250.

Freddie Mac will also give servicers up to 300 days to work with delinquent borrowers in Washington, D.C., and 20 states that have "relatively fast" foreclosure process. The affected states include Alabama, Alaska, Arizona, Arkansas, California, Georgia, Hawaii, Maryland, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, North Carolina, Rhode Island, Tennessee, Texas, Virginia, West Virginia and Wyoming.

To encourage servicers to reach out to borrowers, Freddie Mac will even provide $15 in reimbursement for servicers who contract with third-party vendors to leave "door hanger" notifications at homes where borrowers are at least 90 days delinquent and have had no prior contact with the servicer. Through March 31, Freddie Mac will pay $50 if vendors knock on a borrower’s door and the borrower contacts their loan servicer, and up to $200 if the door-knock results in a foreclosure being averted.

Mortgage rates fall as inflation fears ease
Rates on 30-year fixed-rate mortgages fell to an average of 6.52 percent with 0.7 point for the week ending July 31, down from 6.63 percent a week ago and 6.68 percent at the same time last year, Freddie Mac said.

"Mortgage rates moved lower this week as a drop in commodity prices eased market concerns over inflation pressures," said Freddie Mac chief economist Frank Nothaft in a press release announcing the results of the company’s weekly rate survey. Gas and oil prices both fell to levels not seen since May, Nothaft noted.

The 15-year fixed-rate mortgage averaged 6.07 percent with an average 0.6 point, down from 6.18 percent last week and 6.32 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.07 percent this week, with an average 0.6 point, down from 6.16 percent last week and 6.29 percent a year ago. One-year Treasury-indexed ARMs averaged 5.27 percent with an average 0.6 point, down from 5.49 percent last week and 5.59 percent at this time last year.

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