Sunday, August 22, 2010

Fannie Mae Closes HomeSaver Advance Program

Fannie Mae says it is retiring one of its foreclosure prevention options. The GSE’s HomeSaver Advance (HSA) program will be taken off the table on September 30.

The company introduced the HomeSaver program in 2008, to bring delinquent first-lien borrowers current when a repayment plan was not feasible. Fannie called HSA “the preferred option to a capitalization-only modification” at the time.

Under the program, servicers were allowed to extend unsecured personal loans to delinquent homeowners of up to $15,000 to cure arrearages of principal, interest, taxes, insurance, and other advances and fees. The loan was payable over 15 years at a fixed rate of 5 percent, with no payments or interest accrual for the first six months.

The HomeSaver Advance program was considered a good workout option when struggling homeowners needed a short-term fix to gain back their financial footing. But as housing woes began to spiral out of control and widespread economic factors, such as rising and elongated unemployment, pushed already distressed borrowers farther behind the mark, redefault rates on mortgages cured through the HomeSaver program began to mount and Fannie Mae turned to HSA less and less.