Many folks were surprised when, three years ago, the country’s biggest and most recognized names in the financial sector, Fannie Mae and Freddie Mac, announced they would be halting all foreclosures during the holidays. Once again, they are packing it up between now and January 2, 2013 and would not be adding more stress to struggling homeowners during the holiday season. Those who feared they’d not have a roof over their heads on Christmas morning can now rest a bit easier knowing they get a breather for a few brief weeks.

The holidays are a chance to be with loved ones and we want to relieve some stress at this time of year,

said Terry Edwards, Executive Vice President of Credit Portfolio Management, Fannie Mae, in an interview with CNNMoney on Tuesday.

The flip side, however, is that the moratorium doesn’t extend to other pre- or post-foreclosure activities that may already have been set in motion. That might include notices of default or scheduled auctions to sell homes. A Fannie Mae representative said all other legal and administrative tasks will move forward as is customary for this time of year. Following this announcement, Bank of America followed suit as did Citibank and Wells Fargo. Bank of America was specific in its presser saying aside from the current halt placed on Hurricane Sandy victims, they would now be extending that courtesy to all other homeowners during December. Meanwhile, the other banks reiterated their commitment to not pursue legal action against Sandy’s victims. There will be no evictions, foreclosure proceedings and possible even collection efforts on unpaid credit card debt, too. Hurricane Sandy victims will have at least through February to decide how they will move forward. It’s not uncommon for many homeowners, with the sense that a burden is temporarily lifted, are able to come current during those lapses. Fannie and Freddie had previously announced a 90-day moratorium on foreclosure sales and evictions in areas affected by Superstorm Sandy.

Fannie says it will suspend evictions of borrowers living in foreclosed homes from December 19 through January 2. Freddie will put evictions on hold as of December 17.

We’re taking this step in support of families who have faced financial challenges and gone through a foreclosure,

said Terry Edwards, executive vice president of credit portfolio management at Fannie Mae.

The holidays are a chance to be with loved ones, and we want to relieve some stress at this time of year. We encourage homeowners having difficulty to reach out for help as soon as possible.

The assistance doesn’t mean lenders will put a hold on foreclosures. Fannie and Freddie say the foreclosure process and the legal proceedings for evictions may continue, but the actual eviction will not take place during the moratorium.

The Federal National Mortgage Association, known as Fannie Mae, is the nation’s largest mortgage buyer. It affects more than ten million home buyers. In September, 2008, it was taken over by the federal government, along with Freddie Mac, as the two mortgage giants struggled with deep losses as investors quickly lost all confidence.

Many Americans don’t know that the federal government created Fannie and Freddie to increase the availability of loans for consumers. Because investors saw safety in these mortgages with the government backing them, they were able to lower the cost of mortgages substantially. It wasn’t until the writing was on the wall when it came to the mortgage sector in the U.S. that investors and consumers alike realized it was just as vulnerable as private lenders. The big problem, however, was the uncovering of evidence that revealed they misused the government’s support to enrich shareholders and executives by backing millions of shoddy loans. Soon, it was announced both agencies had lost more than $30 billion, partly because of the deals executives were making and partly because homeowners were in over their heads, courtesy of a lack of oversight in the mortgage sector.

Earlier this year, Fannie Mae announced that it had finally made a profit in the first quarter and that it did not need additional bailout money. This was the first statement of its kind since the bailout in 2008. The net come toppled $2 billion, which was up from being in the red to the tune of $6.5 billion in early 2011.

Then, this summer, the Treasury Department announced it would be altering the terms of the bailout with both agencies. It was designed to shrink the holdings faster and required payments to the government of all quarterly profits earned. They would also be required to hasten the reduction of their mortgage holdings so that a cap of $250 billion by 2018 would be met with few, if any, problems. This moved the date up by four years. Under the new arrangement, the firms’ portfolios can be no larger than $650 billion each at the end of 2012.

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