The regulator of Fannie Mae and Freddie Mac said yesterday that it would allow the government-controlled mortgage finance companies to cut loan balances for thousands of U.S. borrowers who owe more than their homes are worth, Reuters reported. The Federal Housing Finance Agency said the principal reduction program would be a one-time offering for seriously delinquent borrowers to help them with what the agency director said "could well be their final opportunity to avoid foreclosure." About 33,000 borrowers are expected to be eligible for the relief, the agency said. Homeowners have to meet certain criteria to qualify, including having an outstanding principal balance of more than $250,000 and being more than 90 days delinquent on mortgage payments as of March 1. The agency on Thursday unveiled other changes designed to minimize foreclosures, including modifying rules for Fannie Mae and Freddie Mac to sell defaulted loans. The companies must now instruct their debt buyers to evaluate borrowers for loan forgiveness or principal reduction options. Also, debt purchasers can no longer release and walk away from possessed, vacant properties.
