Fannie and Freddie May Start Easing Mortgage Payments

A new report suggests that a proposal under consideration by the Obama administration would have Fannie Mae and Freddie Mac begin to ease mortgage payments for hundreds of thousands of borrowers in the hopes that other finance companies will follow their example.


Two industry sources familiar with the deliberations told Reuters that officials from the U.S. Treasury and the Department of Housing and Urban Development (HUD) recently worked with the Federal Housing Finance Agency (FHFA) to establish standards for qualification and how to persuade lenders to follow suit.

Treasury officials had continued those debates through the weekend attempting to find the advantages versus the expense of numerous potential methods commented an anonymous source linked to the talks.

"They want to get rid of all the high-cost mortgages out there and figure that there are 1.5 million people who could stay in their homes this year if their loans were modified," said one anonymous source.

"But it's just really complicated and expensive to do these kind of workouts."

Washington's two largest foreclosure-prevention initiatives of the last 12 months have fallen flat with only a handful of borrowers having been helped despite promises that hundreds of thousands would qualify.

Officials hope to clear the red tape and rigid terms that have doomed past mortgage-aid efforts without burdening taxpayers with many billions of dollars in funding costs.

Since being taken over by the Federal Housing Finance Agency last September, Fannie, along with its counterpart, Freddie Mac, were once pioneers in the Washington business sector.

Fannie and Freddie are the nation’s largest sources of mortgage funding, owning or guaranteeing a combined $5.2 trillion of the home-loan market reaching $12 trillion.

Both Fannie and Freddie have posted losses for the previous five quarters ending in September of a combined total of $68.4 billion but have yet to post their fourth quarter results

"Fannie Mae is taking steps to realign the company's organization, personnel and resources to focus on our most critical priorities, which include preventing foreclosures to help keep people in their homes and aiding in the recovery," said Brian Faith, spokesman for Fannie Mae.

After announcing an extension of a ban on foreclosure sales and evictions in early January, Fannie Mae said it will continue to suspend the evictions of qualified renters living in properties under foreclosure proceedings and allow them to sign month-to-month leases until the foreclosure is complete.

Fannie and Freddie are the nation’s largest sources of mortgage funding, owning or guaranteeing a combined $5.2 trillion of a home-loan market reaching $12 trillion.

Both Fannie and Freddie have posted losses for the previous five quarters ending in September of a combined total of $68.4 billion but have yet to post their fourth quarter results.


Posted on Tuesday, February 10, 2009 by admin