After years and years of overly loose lending standards that made it too easy to get into a home, homeowners are finally set to catch a break. Fannie (FNM) and Freddie (FRE) are unveiling a plan this afternoon to help mitigate foreclosures:
WSJ: The streamlined effort will target certain loans that are 90 days or more past due, these people said. The program will aim to bring the ratio of mortgage payments for these homeowners to 38% of their income by modifying interest rates and in some cases forgiving portions of principal debt, these people said.
Borrowers would have to provide a statement or affidavit showing that they have encountered some sort of hardship that has impacted their ability to pay their mortgage. It would only apply to loans made on or before Jan. 1, 2008, and borrowers will be disqualified if they file for bankruptcy. The homes must be owner-occupied and escrows for real estate taxes and insurance must already be set up.
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