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The Associated Press June 18, 2010, 3:12PM ET

Homeowners may get break for faulty drywall

Freddie Mac said Friday that home loan servicers are free to temporarily lower or suspend borrowers' mortgage payments on a single-family home if they have defective drywall that needs to be removed.

Under the guidelines announced by the government-sponsored mortgage purchaser, lenders and servicers, which collect payments on home loans, have the discretion to suspend a borrower's mortgage payment for up to three months or to reduce it for up to six months.

Servicers may also recommend forbearance for up to 12 months, the company said.

The policy is aimed at helping homeowners cover the cost of removing drywall and repairing damage, such as metal corrosion.

It is up to the loan servicers to decide whether they want to give a borrower with faulty drywall forbearance under the new Freddie Mac guidelines.

Homeowners in recent years have reported health problems along with corrosion of wiring, computers, doorknobs and jewelry due to certain types of Chinese-made drywall.

Many homebuilders have spent millions to remove the Chinese drywall from homes and hundreds of lawsuits have been filed nationwide over the problem.

Freddie Mac didn't specifically name Chinese-made drywall in its guidelines, but cited a federal study that found a strong connection between some types of drywall and foul odors and metal corrosion in homes.

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