(Updates with details and comments)
By Jessica Holzer Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- The regulator for Fannie Mae (FNM) and Freddie Mac (FRE) predicted Thursday that the government-sponsored enterprises' new streamlined approach to loan modifications would be widely adopted by mortgage servicers.
"Hopefully it will become the new standard," Federal Housing Finance Agency Director James B. Lockhart said while speaking at the New America Foundation.
Lockhart said that mortgage servicers he had spoken with in recent days were "very pleased" with the announcement of the new program.
"They think the new structure will give them a lot more cover," he told reporters after speaking on a panel.
Under the new plan, Fannie and Freddie will work with strapped borrowers to adjust their mortgage payments to no more than 38% of monthly gross household income. The modifications will include extending the term of the loans, modifying interest rates and principal forbearance.
The program targets borrowers who are more than 90 days past due on their payments. Lockhart, along with other U.S. officials, unveiled the plan on Tuesday.
Lockhart, who has said recently that Fannie and Freddie could do more to help troubled borrowers, said Thursday that the mortgage giants now are "doing everything they can" to prevent foreclosures.
Also speaking on the panel, Bank of America Deputy General Counsel Gregory Baer spoke about his company's loan modification efforts. He said the bank hasn't had too much difficultly getting investors to agree to loan modifications.
"Generally we've had implicit if not explicit authority" to modify the loans, he said. Where they don't have authority, the bank has gone to individual investors and negotiated, he said.
Baer said the bank also generally ignored second or "piggy-back" mortgages on the property. Piggyback mortgages had been raised as a potential hurdle to loan modifications. But Baer said they were "more of a theoretical problem."
Lockhart said he didn't know when the spreads on Fannie's and Freddie's debt would start to return to normal levels. He attributed the high rates on the debt, which has contributed to stubbornly high mortgage rates, to confusion about the firms' new structure.
"It's going to take time for confidence to come back. I think right now investors are confused," he said.
He added, "We're starting to see signs that the dust is starting to settle."
-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com
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(END) Dow Jones Newswires
November 13, 2008 17:47 ET (22:47 GMT)

Publié le 13 novembre 2008 Copyright © 2008 Dowjones