'We have a Mortgage Help Center in Atlanta where homeowners can meet with a trusted housing counselor to discuss their mortgage situation and options to. By the end of 2007, these two entities, along with the Federal Home Loan Banks, were providing 90 of the financing for new mortgages. 'Fannie Mae is committed to helping homeowners avoid foreclosure whenever possible,' Amy Bonitatibus, senior director for Fannie Mae corporate communications, stated in an email to HuffPost. He said the company plans to stretch the term on subprime loans to 40 years from the current maximum 30 years - which will reduce monthly payments for borrowers by around 5 percent. Freddie Mac, officially known as the Federal Home Loan Mortgage Corporation, and Fannie Mae, or the Federal National Mortgage Association, were created to help make home ownership accessible to more people. He said the new products will include 30-year and possibly 40-year fixed-rate mortgages as well as adjustable-rate mortgages with longer fixed-rate periods.įannie Mae, in a new program called “HomeStay,” is offering new options so that lenders can help subprime borrowers refinance out of high-interest adjustable-rate mortgages or other difficult loans, said President and CEO Daniel Mudd. Before you make any rash decisions, check out the site’s advice about home mortgage scams, next steps, and the best options that are open to you. Richard Syron, Freddie Mac’s chairman and chief executive, said the company is “working on a major effort to develop more consumer-friendly subprime products that will provide stable financing alternatives going forward,” which are expected to be available by midsummer. The site, which is affiliated with Fannie Mae, is a credible, comprehensive collection of information to help you through your situation. Currently, NFHA and its partners have investigated 2,106 REO properties owned by Fannie Mae in 34 metropolitan areas encompassing 129 cities across the United States. The greater distance now usually separating the home borrower and the ultimate holder of the mortgage, Bair acknowledged, “has complicated the ability of interested parties to apply flexibility and creativity to assist borrowers facing difficulty.” by Fannie Mae and its asset management contractors.
But when the interest rate jumps to 7 percent, say, in the second year of the mortgage, his payments rise to $1,320.59 a month - a move that regulators call “payment shock.” They are considered higher-risk loans because they typically draw borrowers in with an initial low “teaser” interest rate, which can spike upward after the first few years.Ī homeowner who takes out a $200,000 ARM with a teaser rate of 4 percent, for example, initially pays $954.83 monthly in principal and interest.
Most importantly, Bair added, “people would be able to stay in their homes.”Īdjustable-rate mortgages, known as ARMs, are especially prevalent in the subprime market. Restructuring their expensive adjustable-rate mortgages “into more affordable products, especially 30-year fixed-rate mortgages, would bring them back to good standing, allow them to repair their credit histories and dampen the impact that foreclosures may have on the broader housing market.”
Many of those borrowers “could avoid foreclosure if they were offered (loans) that allow for affordable mortgage payments,” Bair testified.
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