Fannie, Freddie Expanding Roles In Stricken Housing Market

In Washington, D.C., The Associated Press reports:

• Fannie Mae will allow more struggling homeowners to sell their homes for less than they owe on their mortgages in a gambit that could hit the mortgage finance company with upfront losses but stave off massive hemorrhage from foreclosures. The program by the largest U.S. financier and guarantor of home mortgages addresses homeowners with "upside-down" loans who owe more than their homes are worth. There are now an estimated 9 million U.S. homeowners in that predicament, according to Moody's Economy.com. Encouraged by regulators and politicians intent on keeping more homeowners from defaulting, Fannie Mae and its smaller government-sponsored sibling Freddie Mac have expanded their roles in the stricken housing market.

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• Brad German, a spokesman for McLean, Va.-based Freddie Mac, said the company recently changed its policy regarding its mortgage servicers in a way that increased approvals of short sales by 90 percent between the fourth quarter of 2007 and the first quarter of this year. Late last year, Freddie Mac gave some of its servicers more authority to accept short sales without prior approval from the company, German said.

For more, see Fannie Working on Mortgage Plan (Fannie Mae to OK 'upside-down' sales).