Freddie & Fannie Up Workout Incentives.(Federal Home Loan Mortgage Corp.)(Federal National Mortgage Association)

Byline: Ted Cornwell

Washington-Freddie Mac and Fannie Mae are raising the incentives they pay for mortgage workouts to ensure hurried servicers are focused on helping their troubled borrowers get back on track and avoid foreclosure.

Freddie said it has doubled the incentives it pays servicers effective Aug. 1. Now Freddie servicers can earn $500 for a repayment plan, $800 for a loan modification or $2,200 for a short sale.

"We recognize that it is a difficult market out there," said Robert Padgett, Freddie's director of nonperforming loans. "We think that by increasing the payments to our servicers they will be able to help the borrowers more frequently."

Fannie said it will double its cash incentives for repayment plans to $400 and begin paying $700 for loan modifications.

"These loss mitigation incentives encourage our servicers to implement workout solutions and drive better processing and response time," said Fannie vice president Jason Allnut.

Fannie also said it will pay $1,000 to $1,500 for a short sale and $1,000 for a deed-in-lieu. The mortgage giant is going to provide more details about its incentive program later this summer, a Fannie spokewoman said.