The Federal Housing Finance Agency and others in government and the mortgage industry announced Tuesday a new program to renegotiate home loans held by Fannie Mae and Freddie Mac. The plan, which will become effective December 15, 2008, will be available to borrowers who are at least three months behind on their mortgage and who owe 90 percent or more than the home’s current value. The program excludes borrowers in bankruptcy and investors who do not live in the homes. Under the plan, borrowers may obtain a reduced interest rate to allow them to pay no more than 38 percent of their income on housing. Other options include loan extensions to 40 years and interest-free deferral of a portion of the prinicipal amount.
In related news, Citigroup announced a moratorium yesterday on foreclosures for certain borrowers (those who live in their homes, have incomes of a certain amount and are likely able to make reduced mortgage payments), an expansion of the program to include mortgages the bank does not own but for which it collects payments, and assistance to borrowers who are close to defaulting (mortgage adustment, principal reduction and decreasing loan term). Also, JPMorgan Chase & Co. recently expanded its mortgage modification program, and Bank of Amercia as part of a legal settlement, agreed to modify loans once held by Countrywide Financial Corp.
Source: http://news.yahoo.com/s/ap/20081111/ap_on_bi_ge/meltdown_mortgages#full
Tags: Fannie Mae, Federal Housing Finance Agency, Freddie Mac
