More foreclosure help announced

01.09.09
By Nicholas Storie

As the foreclosure rate in many U.S. cities and counties rises, some companies and lawmakers are working together to help people avoid losing their homes.

For example, Fannie Mae and Freddie Mac announced on Thursday that they have extended the period in which foreclosure sales and evictions will be frozen until the end of January.

The mortgage giants began taking part in the Streamlined Modification Program in December, which allows borrowers to reduce their interest rate, stretch out the life of the loan or defer payments on the principal.

Previously, Fannie and Freddie had said they would delay evictions on single-family homes until after the holidays, but now they would like more time to make sure their loan modification program is implemented properly.

To qualify for the program, borrowers need to have fallen seriously behind on their home loan, missing at least three payments. It also stipulates that owners have to use the property as their primary residence and have not filed for bankruptcy.

Meanwhile, Citibank has also agreed to legislation that would effectively allow judges to reduce mortgage debt for people filing for bankruptcy.

As part of the arrangement, borrowers would be required to show proof that they had contacted their lenders at least 10 days before filing to try to reach an agreement on modifying the loan.

Senator Dick Durbin, who wrote the bill, said that he hoped the legislation - if enacted - would encourage mortgage lenders to be more open about changing loan terms to help struggling borrowers avoid foreclosure.

President-elect Barack Obama has also indicated his support for the measure, saying it will be one of his priorities once he enters office.

More Housing Market Articles | News Home | Discuss in our Forum

Companies and lawmakers are working to help people avoid foreclosure