New Mortgages Planned to Forestall Foreclosures
Against a backdrop of planned legislation now being drafted in Congress to rein in runaway subprime lenders, two of the nation’s mainstream mortgage mainstays are developing new products to help beleaguered borrowers.
With millions potentially facing foreclosure litigation because of high-rate adjustable mortgages and unsuitable products marketed to those who could not afford them, government-sponsored Fannie Mae and Freddie Mac, the two biggest home mortgage buyers and guarantors in the country, are developing new types of loans to help borrowers with high-risk mortgages keep their homes, AP reports.
Fannie Mae has developed a new program called HomeStay that will feature 30- and 40-year mortgages at fixed interest rates, as well as hybrid adjustable mortgages in which the initial period during which a fixed rate applies will be extended.
The announcement, which followed a meeting Monday of federal officials and mortgage industry executives at Federal Deposit Insurance Corporation headquarters, came just before a hearing today by the House Financial Services Committee.