Magazine article American Banker

Lawmakers Ask Patience for Debtors Strapped by Government Shutdown

Magazine article American Banker

Lawmakers Ask Patience for Debtors Strapped by Government Shutdown

Article excerpt

Two key lawmakers have asked the federal housing agencies to persuade loan servicers to cut some slack for furloughed government workers who miss mortgage payments.

In identical letters sent Dec. 28 to the chairmen of Fannie Mae and Freddie Mac, House Banking Committee Chairman Jim Leach urged that the workers be "protected from unintended consequences of the budget impasse."

The same day, Rep. Rick Lazio, chairman of the banking panel's housing subcommittee, urged Housing and Urban Development Secretary Henry Cisneros to extend forbearance to borrowers whose mortgages are held in Ginnie Mae pools.

The lawmakers were responding to the second government shutdown in six weeks. Tens of thousands of government workers have been left without paychecks because Congress and the Clinton administration are logjammed over the budget.

Observers don't expect the budget impasse to drive up delinquency rates dramatically. Even so, federal employees run the risk of missing payments, forcing lenders to decide what actions, if any, to take.

Lawmakers "send out similar letters for natural disasters, so I guess they put this in the same category," said Brian Chappelle, staff vice president for the Mortgage Bankers Association of America.

In his letters, Rep. Leach asked Fannie and Freddie - formally the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. - to advise companies that collect and process mortgage loan payments of options for dealing with delinquent borrowers. …

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