Government Announces Much-Awaited Anti-Foreclosure Program

Government-managed mortgage giants Fannie Mae and Freddie Mac have announced their offer to lower monthly payments for borrowers nearing foreclosures. Federal officials maintained that the Fannie Mae and Freddie Mac move was just a part of the government’s program to put a stop to the rising numbers of foreclosure properties.

The reworking plans will target Fannie and Freddie’s borrowers who have accounts that were delinquent for 90 days or more. In an effort to lesson the alarming number of foreclosure homes, the two largest mortgage holders are said to be offering lower interest rates and staggered principal amount payments. Fannie and Freddie are also open to extending terms to as much as 40 years.

Treasury Department and Federal Housing Finance Agency officials also said that the companies will rewrite their mortgage terms. Such a move was planned so borrowers can pay their mortgages for less than the traditional required amount. Qualified borrowers will only use less than 38% of their monthly income to pay for debts.

Marketwatch.com said in its report that the current anti-foreclosure program was the most aggressive move that the federal government has made.

Federal Housing and Finance Agency Director James Lockhart III said that such a drastic measure to improve the situation of the housing market was long overdue. He said that the current number of foreclosure homes has not just affected the national housing market. Lockhart maintained that foreclosed homes have great impacts on the families involved.

Although the initiatives were only aimed at Fannie’s and Freddie’s borrowers, the government is positive that mortgage companies in the private sector will follow suit. True enough, companies like JPMorgan Chase and Citigroup Inc has announced similar plans.

Jay Brinkman, MBA Chief Economist, said that, given the situation of some borrowers, the government is aware that the plan cannot resolve ll the foreclosure-related problem. However, he believes that if the government can help half of the borrowers, all efforts would prove to be worth it.

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This entry was postedonFriday, November 14th, 2008 @ 10:56 pmon the category Stop Foreclosures. You can follow any responses to this entry through theRSS 2.0You can leave a response, or trackback from your own site.