Fannie, Freddie Woes May Be Good News For Struggling Homeowners Seeking Loan Modifications

The Associated Press reports:

• The government's takeover of mortgage finance companies Fannie Mae and Freddie Mac should provide an opportunity to modify more home loans for troubled borrowers, government officials said Wednesday.

• Both companies are "looking at loan modification programs that can be done through mass solicitation programs with streamlined processing,'' James Lockhart, director of the federal agency that took over Fannie and Freddie earlier this month, said by e-mail. Such an effort could have a tremendous impact because Fannie and Freddie own or guarantee more than $5 trillion in loans, about half of the nation's total.

• "There are still a lot of mortgages out there that need to be restructured and families that can still be helped,'' Sheila Bair, chairman of the Federal Deposit Insurance Corp., told lawmakers that Wednesday. With 1.5 million foreclosures last year and 1.2 million already in the first six months of this year, the foreclosure crisis is accelerating, she said.

• Under Bair's stewardship, the FDIC has rolled out a plan to help refinance delinquent IndyMac Bank borrowers into 30-year mortgages with interest rates currently capped at 5.9 percent. The FDIC introduced the program about a month ago after it seized the Pasadena, Calif.-based lender, now called IndyMac Federal Bank, in July.

• Some lawmakers and consumer advocates are urging the government to replicate the program among loans held by Fannie Mae and Freddie Mac, which bought loans from IndyMac, Washington Mutual and many other banks as part of their official role in supporting the housing market.

For the story, see Fannie, Freddie collapse could help borrowers.

See also, Modified IndyMac loans showing results - FDIC's Bair (Bair said among the 60,000 delinquent IndyMac mortgages, about 40,000 are eligible for the FDIC's loan modification program).