Fannie Mae & Freddie Mac Announced Plans for Mortgage Loan Modifications

At a press conference held today at the Federal Housing Finance Agency, temporary conservator of Fannie Mae and Freddie Mac, a plan was announced to speed up the modification of hundreds of thousands of loans held by Fannie Mae and Freddie Mac. The loans being targeted are those that are 90 days or more past due.

The program's goal is to bring the ratio of mortgage payments for these targeted homeowners to 38% of their income by modifying interest rates and in some cases forgiving portions of principal debt. It will only apply to loans made on or before January 1, 2008, for homes that are owner-occupied, and if a homeowner has filed for bankruptcy, he or she will be disqualified from participating in the program.

U.S. government officials plan to encourage large banking institutions that hold mortgage loans in their portfolios to take similar streamlined modification measures. Several large banking institutions, including Bank of America Corp., Citigroup Inc. and J.P. Morgan Case & Co., have already announced their own foreclosure plans.

For more information, click here for the Federal Housing Finance Agency news release which includes FAQs about the program.