US lays out sweeping program to ease mortgages

The US government Tuesday announced a sweeping program to ease payment terms for hundreds of thousands of homeowners struggling to service mortgages held by home finance giants Fannie Mae and Freddie Mac.

"Today, we're announcing a major program designed to greatly reduce preventable foreclosures with a simplified, streamlined loan modification program to get struggling homeowners into mortgages that they can afford," said James Lockhart, director of the Federal Housing Finance Agency, which temporarily took over struggling Fannie Mae and Freddie Mac in September.

"It is an achievable goal if homeowners, banks, mortgage servicers and investors, Fannie Mae, Freddie Mac all work together," Lockhart said.

He said the Streamlined Loan Modification program aims to widen and speed up the adjustment of home loans to stifle the growth in delinquencies and foreclosures in the US housing industry.

The program brings together his agency, Fannie Mae and Freddie Mac, the Hope Now alliance of counseling agents, servicers, investors and other mortgage market participants, and the Federal Housing Administration.

Lockhart noted that Fannie Mae and Freddie Mac own or guarantee almost 31 million mortgages, including roughly 58 percent of all single-family mortgages in the United States.

"Although these mortgages only represent about 20 percent of serious delinquencies, I believe their (Fannie and Freddie's) leadership role combined with the many partners of Hope Now should spread this approach throughout the whole mortgage loan servicing business," he said.

"Foreclosures increased 150 percent over the last two years. Foreclosures hurt families, their neighbors, whole communities and the overall housing market. We need to stop this downward spiral," Lockhart said.