Mortgage Giants

As California pushes to get more homeowners into a $2-billion foreclosure prevention program, some Fannie Mae and Freddie Mac borrowers may see their mortgages shrunk through principal reduction. State officials are making a significant change to the Keep Your Home California program. They are dropping a requirement that banks match taxpayers funds when homeowners receive mortgage reductions through the program. The initiative, which uses federal funds from the 2008 Wall Street bailout to help borrowers at risk of foreclosure, has faced lackluster participation and lender resistance since it was rolled out last year.

In sweeping new rules aimed at fixing the home lending market, the Consumer Financial Protection Bureau on Thursday will define a "qualified mortgage" - one a borrower can actually be expected to pay back - while in effect banning a slew of dicey loans at the center of the financial crisis. The regulations, among the most important handed down yet by the 18-month-old agency, also aim to loosen the choking loan standards that have prevailed since the housing crash. They do so by limiting bankers' liability for prime loans that can be sold to government-backed mortgage giants such as Fannie Mae. The rules, to be phased in over the coming year, aim to improve access for creditworthy borrowers to today's historically low-interest loans and to create a stable and predictable housing finance system for banks and their customers alike.

In a rare victory for proponents of principal reduction, Fannie Mae and Freddie Mac said they will immediately allow their borrowers to participate in the Keep Your Home California program that uses taxpayer funds to shrink the mortgages of troubled borrowers. California officials made a significant change to the program last year, The Times reported previously , dropping a requirement that banks match taxpayer funds when homeowners receive mortgage reductions through the program.

Bank of America thought it was laying claim to a crown jewel of American mortgage lending when it scooped up Countrywide Financial Corp. at the depths of the housing crisis in 2008. With a name reflecting its ambition, Countrywide transformed itself from a regional lender in Calabasas to a burgeoning powerhouse. It seemed to have perfected the elusive art of making home loans to borrowers with scuffed credit. But the deal quickly became a millstone for Bank of America, U.S. taxpayers and the American economy when Countrywide dissolved in a heap of bad loans and shoddy bookkeeping.

Federal and state officials on Thursday announced a landmark $25-billion agreement with the nation's five largest mortgage servicers to settle investigations involving foreclosure abuses and try to stabilize the housing market. The deal would give $17 billion in relief to current homeowners, mostly by reducing the amount of principal they owe on their mortgages. An additional $5 billion would be paid in cash to California and more than 40 other states as restitution for foreclosure paperwork problems and other improprieties by the servicers in the foreclosure process.

Federal Reserve Chairman Ben S. Bernanke urged Congress on Tuesday to bolster regulation of mortgage giants Fannie Mae and Freddie Mac and suggested limiting their massive holdings to guard against any danger their debt poses to the overall economy. Bernanke has previously supported efforts to pare the two mortgage companies' huge portfolios.

Federal Reserve Chairman Alan Greenspan again pushed for limits on the multibillion-dollar mortgage holdings of Fannie Mae and Freddie Mac, saying such restrictions would not hurt the thriving housing market. Greenspan, who has been pressing Congress to limit the holdings of the two mortgage giants, warned Thursday that their debt poses a risk to U.S. financial markets.

Vice President Al Gore's potential legal challenge to the presidential vote in Florida rattled the stock market overall on Thursday, but investors picked at least two winners out of the election mess: mortgage finance giants Fannie Mae and Freddie Mac. Fannie Mae (ticker symbol: FNM) jumped $3.50 to $76.75 and Freddie Mac (FRE) rose $2.13 to $58.38 after analysts said the election results probably reduce the likelihood that Republicans will succeed in winning tighter regulation of the companies.

The heads of mortgage giants Fannie Mae and Freddie Mac assured senators Wednesday that their collapse was unlikely, a day after Federal Reserve Chairman Alan Greenspan warned that they could pose a threat to the U.S. financial system if their ability to assume new debt isn't restrained.

The rapid deterioration of Fannie Mae's and Freddie Mac's financial health made a federal takeover of the mortgage giants inevitable. Yet it still seemed sudden when the government swooped in over the weekend, putting the companies under the strict control of its federal regulator to avert an even larger taxpayer-funded bailout. Just two months ago, officials at the Treasury Department and the Federal Reserve tried to reassure Fannie and Freddie shareholders by offering to shore up the companies with low-interest government loans and, potentially, an investment in their stock.

In a rare victory for proponents of principal reduction, Fannie Mae and Freddie Mac said they will immediately allow their borrowers to participate in Keep Your Home California and other states' Hardest Hit Fund programs that shrink the mortgages of troubled borrowers using taxpayer funds. California officials made a significant change to the program last year, dropping a requirement that banks match taxpayer funds when homeowners receive mortgage reductions through the program. That means Fannie and Freddie will not have to incur further losses on their loans.

In a rare victory for proponents of principal reduction, Fannie Mae and Freddie Mac said they will immediately allow their borrowers to participate in the Keep Your Home California program that uses taxpayer funds to shrink the mortgages of troubled borrowers. California officials made a significant change to the program last year, The Times reported previously , dropping a requirement that banks match taxpayer funds when homeowners receive mortgage reductions through the program.

As California pushes to get more homeowners into a $2-billion foreclosure prevention program, some Fannie Mae and Freddie Mac borrowers may see their mortgages shrunk through principal reduction. State officials are making a significant change to the Keep Your Home California program. They are dropping a requirement that banks match taxpayers funds when homeowners receive mortgage reductions through the program. The initiative, which uses federal funds from the 2008 Wall Street bailout to help borrowers at risk of foreclosure, has faced lackluster participation and lender resistance since it was rolled out last year.

At last, there's a deal on the table. Five of the biggest mortgage lenders have agreed to pony up $25 billion to settle allegations that they cut corners while foreclosing on people's homes. About $5 billion would be cash payments to states and federal authorities, $17 billion would be pegged for homeowner relief, roughly $3 billion would go for refinancing and $1 billion would be paid to the Federal Housing Administration. This is good, as far as it goes. And homeowners can certainly use some help.

Federal and state officials on Thursday announced a landmark $25-billion agreement with the nation's five largest mortgage servicers to settle investigations involving foreclosure abuses and try to stabilize the housing market. The deal would give $17 billion in relief to current homeowners, mostly by reducing the amount of principal they owe on their mortgages. An additional $5 billion would be paid in cash to California and more than 40 other states as restitution for foreclosure paperwork problems and other improprieties by the servicers in the foreclosure process.

Struggling homeowners are set to get more help from the federal government as the Obama administration extends its key foreclosure prevention plan for a year. The administration also will expand those eligible for the program to include investors and will increase incentives for large banks to modify more troubled mortgages. Originally set to expire in December 2012, the administration's Home Affordable Modification Program will be extended for another year, government officials said Friday.

Acting to prevent a severe disruption of the mortgage market, the federal government stepped in Sunday with plans for a sweeping aid package designed to bolster confidence in battered home-loan giants Fannie Mae and Freddie Mac. The Bush administration said it would ask Congress to authorize the Treasury Department to lend Fannie and Freddie more money than current limits permit and buy stock in the two companies.

It was a quarter of controversy and uncertainty for mortgage giants Fannie Mae and Freddie Mac, but it won't stop them from turning out healthy earnings increases. Indeed, Wall Street expects Fannie Mae to bring in second-quarter earnings of $1.86 a share, up 20% from $1.55 a year ago. At least one analyst, Sandler O'Neill & Partners' Michael McMahon, pegs the number even higher at $1.89 a share. Freddie Mac is expected to post earnings of $1.41 a share, up from $1.30 a year earlier.

Mitt Romney opened an aggressive new phase of the Republican presidential campaign as he cruised into Florida on Sunday night - casting Newt Gingrich as an unethical politician whose temperament and unreliability led to his ouster as speaker of the House in the 1990s. After a week in which he conceded his Iowa win to Rick Santorum after a recount and lost to Gingrich by double digits in South Carolina, Romney acknowledged that the Republican contest had become a three-man race.

Homeowners who lose their jobs will be able to skip payments on loans backed by Freddie Mac for up to a full year under a new policy taking effect Feb. 1 at the mortgage finance giant. The change, doubling the forbearance extended to the unemployed, squares Freddie Mac's policies with those that its sister company, Fannie Mae, adopted in September 2010. The two firms, operating under government conservatorship since nearly melting down three years ago, own or guarantee more than half of all U.S. mortgages.