Mortgage Companies

The Obama administration has been working on plans that will help prevent foreclosure incidents form continually surging. One of these plans is expected to lower payments for borrowers under Fannie Mae and Freddie Mac who are having a hard time coping with their mortgage. It also plans to promote the same strategy to Wall Street.

Over the past 12 months, foreclosure-prevention efforts in Washington have not been successful. Hundreds of thousands of borrowers were expected to receive assistance but only a few actually got the help they needed. One of the problems most often encountered is the long processes involved when seeking mortgage assistance. Officials aim to address the stern measures that come with mortgage application without causing taxes to surge because of additional costs.

These efforts may be costly but if pushed through, they can help approximately 1.5 million homeowners by the end of the year. Fannie Mae and Freddie Mac, two of the largest mortgage companies in the country, are expected to provide assistance to homeowners since they are government-controlled. Just last year, both companies declared a foreclosure moratorium. Aside from that, they initiated a program where homeowners who lost their home to foreclosure would be allowed to rent the property later on.

However, despite the success of their foreclosure-prevention efforts, the two companies were not as successful in rewriting home loans. They own more than half of the single-family property loans in the country but only an insignificant part is eligible for refinancing program. The same program implemented by the Department of Housing and Urban Development suffered the same fate. Only hundreds from the expected 400,000 homeowners received assistance.

Fannie Mae and Freddie Mac are still relied on in implementing the mortgage assistance program of the administration. The program is hoped to be granted $50-100 billion from the remaining $350 billion bailout fund. The amount would be spent for underwriting delinquent loans. Also, part of the money will be used to subsidize mortgage companies as earlier done with Fannie Mae and Freddie Mac. On Tuesday, Secretary Timothy Geithner of the Treasury will be laying out plans for the use of the remaining bailout funds. Specific details about the plans are expected to follow later on. Foreclosure-prevention is hoped to be prioritized in the use of the funds.

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