Daily Real Estate News  |  April 19, 2007  |   Fannie, Freddie Plan to Help Distressed Borrowers
The heads of Fannie Mae and Freddie Mac told a House Financial Services committee Tuesday that they are devising new types of loans to help distressed borrowers.

Richard Syron, Freddie Mac's chairman and CEO, says the company is developing more consumer-friendly subprime products that will provide stable financing alternatives. He expects them to be available by mid-summer. He says 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.

Fannie 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, says president and CEO Daniel Mudd.

He said the company plans to stretch the term on sub-prime loans to 40 years from the current maximum 30 years – which will reduce monthly payments for borrowers by about 5 percent.

Source: Associated Press (04/18/2007)