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I don’t want to say anything to jinx it, but this plan looks pretty solid (this via the Washington Post):
The government and mortgage industry — including federally run mortgage finance giants Fannie Mae and Freddie Mac — today announced a streamlined system for modifying the mortgages of hundreds of thousands of borrowers to avoid foreclosure.
Under the program, Fannie Mae, Freddie Mac and other companies would move to modify mortgages for borrowers who are more than 90 days late on paying their loans and fit within certain formulas. That contrasts with the current system, where modifications are addressed on a case-by-case basis.
The goal of the new program would be for borrowers’ annual mortgage payment to equal 38 percent of annual income, the model used successfully by the government when it took over IndyMac in California. The companies would do that by extending the loan term, reducing the interest rate and, if necessary, delaying payment on a part of the principal of the loan. If a borrower is able to meet payments for three months, the change would become permanent.
Photo by Mike Licht, NotionsCapital.com