Company: FMCCN
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0001026214-25-000040
Chunk: 26

Company: FEDERAL HOME LOAN MORTGAGE CORP
Filing Date: 2025-02-13
Form: 10-K
Item: Item 11
Chunk 26
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 our loss mitigation activities which could make these activities more costly to us.

We offer (or previously offered) a variety of borrower assistance programs, including refinance programs and loan workout activities for eligible borrowers. Our loan workouts include both home retention options and foreclosure alternatives. 

Relief Refinance Program

We previously offered relief refinance programs for eligible homeowners whose loans we already owned or guaranteed to refinance with more favorable terms (such as reduction in payment, reduction in interest rate, or movement to a more stable loan product) and without the need to obtain additional mortgage insurance. These programs also provided liquidity for borrowers who were current on their mortgages but were unable to refinance because their LTV ratios exceeded our standard refinance limits. Our most recent relief refinance offering, the Enhanced Relief RefinanceSM program, has been suspended until further notice. However, our single-family mortgage portfolio continues to include loans that we acquired under these programs in prior periods. For additional information on outstanding relief refinance loans, see MD&A - Risk Management - Credit Risk - Single-Family Mortgage Credit Risk.

Loan Workout Activities

Home Retention Options 

When refinancing is not practicable, we require our servicers to attempt to establish contact with the borrowers to discuss the most appropriate options for delinquency resolution. When the contact is established, we require our servicers first to evaluate the loan for a forbearance plan, repayment plan, payment deferral plan, or loan modification, because our level of recovery on a loan that reperforms is often higher than for a loan that proceeds to a foreclosure alternative or foreclosure. Although workout options are often less costly than a foreclosure, we incur costs as a result of our loss mitigation activities. Specifically, payment deferral plans result in non-interest-bearing balances we have to finance for the life of the mortgage, resulting in economic costs as a result of this program. Additionally, we incur economic losses on loan modifications that involve an interest rate reduction or principal forbearance, and we incur expenses related to incentive fees we pay to servicers for certain successfully completed loan workouts. 

We offer the following types of home retention options:

n    Forbearance plans - Arrangements that require reduced or no payments during a defined period that provides borrowers additional time to return to compliance with the original mortgage terms or to implement another type of loan workout option. Borrowers may exit forbearance by repaying all past due amounts thus fully reinstating the loan, paying off the loan in full, or entering into a repayment plan, a payment