Democrats urge Fannie, Freddie halt foreclosures
09/11 02:38 PM
WASHINGTON, Sept 11 (Reuters) - U.S. Senate Democrats on Thursday urged Fannie Mae (FNM:$0.7794,$0.0394,5.32%) and Freddie Mac (FRE:$0.61,00$-0.05,00-7.58%) to halt all pending foreclosure proceedings on mortgages they hold for at least 90 days.
In a letter to the mortgage finance companies and their regulator, Federal Housing Finance Agency Director James Lockhart, four members of the Senate Banking Committee said the loan modifications could help both homeowners and the companies. The U.S. government took both troubled companies into conservatorship over the weekend.
The senators also asked the companies to revisit their policies and practices governing modifications involving mortgage-backed securities issued by the agencies.
The letter was sent by Charles Schumer of New York, Robert Menendez of New Jersey, Sherrod Brown of Ohio, and Robert Casey of Pennsylvania.
"As you are well aware, the housing crisis continues to devastate too many American families," the senators wrote.
The Federal Deposit Insurance Corp found that a foreclosed mortgage pays 30 cents on the dollar in the current environment while a modified mortgage pays nearly 90 cents, the senators said.
"Clearly, modifying at-risk mortgages maximizes the value of these assets," they said.
The FDIC took control of IndyMac <IDMC.PK> on July 11 and is modifying troubled mortgages held by the California lender in a bid to make the assets more attractive to potential buyers.
The federal insurer said it hoped to send about 29,000 mortgage modification proposals. The modified loans will be available to most borrowers with a first mortgage either owned by, or securitized and serviced by, IndyMac, the FDIC said.
The modifications will be available to borrowers who are seriously delinquent or in default, and apply only to a borrower's primary residence. Modified loans will be permanently capped at an interest rate of about 6.5 percent, the FDIC said. (Reporting by John Poirier; Editing by Leslie Adler)
