Fannie Mae and Freddie Mac Open Discussions on Foreclosures

October 23rd, 2008 | Tags: Foreclosures

Fannie Mae and Freddie under new pilots have opened discussions on foreclosures. They have asked their agents to be more proactive about halting foreclosures. However it was realized that it would take few years before full recovery took place in some of the cities.

David Moffett of Freddie Mac speaking at annual convention of Mortgage Bankers Association said that he did not think any silver bullet would cure the malaise of “overbuilt markets”. Herbert Allison of Fannie Mae who was sitting next to Moffett during the long discussion spoke on similar lines while making his comments. He added that Fannie Maw was open to suggestions coming forth regarding the many problems that had beset the industry. Allison stressed, “Anything that is not necessary under the old traditions, we are going to discard.”

Moffett and Allison have been inducted into the two giant mortgage bodies about seven weeks ago. The duo owns or guarantees nearly $5 million mortgages that amount to about half the home loans of the country. The plan to salvage the wreck devastatee by foreclosures is to pump in about $100 billion into each of the units so that they can stake ownership claims up to 80% of the value of the house.

Fannie Mae and Freddie Mac will also chip into the $700 billion government bailout plan that was given the green signal by the government on 3rd October 2008. The bids are not yet public and as such details are not available. Jennifer Zuccarelli of the Treasury Department declined to confirm the identity of any applicant. Federal Housing Finance Agency that regulates the two also did not make any comments.

Since taking over charge Moffett and Allison have focused on rescheduling the mortgage terms of thousands of borrowers who are defaulting. By doing so they hope that the flood of foreclosed houses rushing into the real estate market will decline and allow the market much needed relief. Till now this year Fannie Mae has stopped 300,000 foreclosures. But Allison feels this is inadequate and much more requires to be done. Moffett did not provide any figures but he said he too has been working on similar lines trying hard to keep people in the houses that are their homes. However both of them reminded that it is unrealistic to expect that all the delinquent borrowers will be save from foreclosure.