Dec 26 The U.S. government is considering
expanding its mortgage refinancing program to include borrowers
whose mortgages are not backed by Fannie Mae and
Freddie Mac, the Wall Street Journal reported, citing
people familiar with the discussions. ()
The refinancing program now being considered also seeks to
include "underwater" borrowers who owe more than their homes are
worth, the Journal said.
The proposal would also transfer potentially riskier loans
held by private investors to the government-sponsored mortgage
entities Fannie Mae and Freddie Mac, the paper said.
Such a move would require congressional authorization to
temporarily change the charters of Fannie Mae and Freddie Mac,
according to the Journal.
About 22 percent of all homes with a mortgage, or around
10.8 million homes, down from 12.1 million last year, were worth
less than the outstanding balance at the end of June, the
Journal said, citing data from CoreLogic.
Under the proposal, Fannie and Freddie would be allowed to
charge higher rates to borrowers in order to compensate for the
risk of guaranteeing refinanced loans that are underwater and
more likely to result in default.
The U.S. Treasury declined to comment.
Combined with Fannie Mae and Freddie Mac, which buy loans
and repackage them as securities for investors, Washington's
footprint in the market has grown to account for nearly nine of
every 10 mortgages.