Fannie, Freddie Offer Mortgage Relief in Chinese Drywall Cases

Freddie Mac and Fannie MaeGovernment-run mortgage financing companies Fannie Mae and Freddie Mac are offering mortgage payment relief for homeowners struggling with Chinese drywall issues that may have forced them out of their homes.
Combined, Fannie and Freddie own more than half of the nation’s residential mortgages.
Lenders servicing single-family mortgages owned by Fannie and Freddie can now suspend payments for a specified period of time. Fannie is offering mortgage forbearance for up to six months, while those with loans backed by Freddie can qualify for mortgage relief for up to one year.
The announcement comes after a federal study that found a strong connection between some types of Chinese drywall and foul odors and metal corrosion in homes. The majority of complaints have come from homeowners in Virginia and states along the Gulf Coast.
But the government has not linked the drywall to specific health problems. Complaining of respiratory problems and other ailments, many families with Chinese drywall are moving out of the homes and having to pay rent elsewhere.
Fannie Mae’s policy will take effect in mid-July. Mortgage servicers will require documentation to evaluate each borrower’s home on a case-by-case basis. A property inspection also will be required to confirm the problem drywall exists.
Freddie Mac’s forbearance policies are underway and give servicers the discretion to suspend a borrower’s mortgage payments for up to three months or reduce payments for up to six months. Servicers may recommend forbearance for up to twelve months, based on the borrower’s individual circumstances.
To find determine if your loan is owned or guaranteed by Fannie or Freddie, see the following links:

2 thoughts on “Fannie, Freddie Offer Mortgage Relief in Chinese Drywall Cases

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  • June 22, 2010 at 9:20 am
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    The Building Envelope Science Institute (BESI) endorsed a remediation protocol back in October 2009 that more than exceeds the recommendations by the CPSC & HUD interim remediation guidance and is aligned with the court’s ruling in the MDL-2047 litigation case (and even more comprehensive).
    The protocol offered through BESI provides (to-date) the most comprehensive remediation process and was developed based on proven science; nicknamed the “BESI System” because of the institute’s endorsement. The protocol for remediation of defective drywall being offered by BESI considers the following major factors: corrosion, cross-contamination of other building materials, personal belongings, IAQ monitoring program, a proposed national warranty (not an insurance policy), and removal of the stigma from having defective “corrosive” drywall.
    In fact, the institute has been certifying qualified candidates for inspection and remediation of structures with defective drywall since last year. Those that have earned a designation as a remediator or consultant through the institute have attended a two-day course with a written final exam; inspectors attend a one-day course with a written final exam. There are prerequisites they have to meet, which includes being in good standing with the state if they are licensed (required for those performing remediation).
    It’s good to know that if your home was remediated under this protocol that it would not require more work in order to meet the CPSC & HUD interim guidance. The Institute has a document that helps explain the protocol called, “The BESI System: Understanding the Protocols for Defective Drywall” which is posted on the website. The Institute has a “Nationwide Directory” that currently allows individuals to locate BESI certified inspectors and remediators for defective drywall.
    More information about the protocols and requirements can be found at http://www.BESInstitute.org.

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