Fighting Foreclosure With New HomeStay Program

It's about time the two biggest government-sponsored loan
entities in America actually heard the pleas from cash-strapped
homeowners and did something worthwhile to ease their pain.

Fannie Mae unveiled a new program called "HomeStay,"
offering brand new options so that lenders can help subprime
borrowers wiggle out of high-interest adjustable-rate mortgages
or other onerous home loans, and into loans that are
"consumer-friendly" to save their home from foreclosure.

President and CEO Daniel Mudd said Fannie Mae plans to
stretch the term on subprime loans up to 40 years from the
current maximum of 30 years — which is anticipated to help
reduce monthly payments for borrowers by around 5 percent. Five
percent is not much, but it's better than a sharp stick in the
eye.

Richard Syron, Freddie Mac's chairman and chief executive,
said his company will be rolling out "more consumer-friendly
subprime products" to provide stable financing by midsummer
2007.

Freddie Mac's new products are reported to include 30-year
and possibly 40-year fixed-rate mortgages as well as
adjustable-rate mortgages with longer fixed-rate periods.

More on "HomeStay" can be found at: FannieMae.com -- HomeStay Announcement

In the press release, we read: "Fannie Mae has a history of working with lenders to serve families who don't have perfect financial profiles. 'Subprime' is, after all, simply the description of a borrower who doesn't have perfect credit."

So, the reason for out interest in this topic is clear: those who do not have a good credit score to show their lender might get screwed by getting stuck into an adjustable rate mortgage that very likely could rise to the point where the mortgage payments are simply unaffordable, and the home, equity and the homeowners sweat-equity in his or her place is lost forever.

We look forward to seeing Freddie Mac and Fannie Mae acting like a benevolent aunt and uncle to calm millions of distressed homeowners and worried housing investors in this country with this and similar actions.

Further, I expect scandals to erupt over this "loose-money" con that was conducted within the usually staid and stuffy world of mortgage banking. May the guilty parties be found out and spend some quality time under arrest.