Fannie Mae boosts mortgage counseling program

NEW YORK (Reuters) - Fannie Mae, the largest provider of funding for U.S. residential loans, is boosting its program that pays counseling fees for delinquent borrowers as it works to curb foreclosures and its own losses.

Fannie Mae (FNM.N) is extending a temporary program to reimburse mortgage servicers for counseling costs through the end of the year from the previous deadline of May 31, according to a note dated May 23 on a company website.

The government-chartered company also said that on June 1 it will increase the maximum amount for reimbursement to $150 per case from $100 per case.

Participating loan servicing companies are part of the Hope Now Alliance, a group organized under guidance from the U.S. Treasury in October to coordinate efforts on foreclosures. A main goal of Hope Now is to increase the rate of contact with delinquent borrowers and urge servicers to ease terms on mortgages.

Record foreclosures are causing a vicious cycle in the housing market by adding to bloated inventory and forcing home prices lower. Despite added risk to the government, lawmakers are urging Fannie Mae and Freddie Mac to buy more mortgages in addition to expanding efforts on foreclosures.

Fallout from the housing slump has led to more than $7 billion in losses for Fannie Mae since June of last year.

Fannie Mae's counseling reimbursements complement other efforts to stem foreclosures, including offering unsecured loans to homeowners in arrears and extending forbearances.

A Fannie Mae spokeswoman did not return a call or e-mail seeking comment.

(Reporting by Al Yoon; Editing by Leslie Adler)