Fannie's Loss Mit Policies Under Fire

Fannie Mae's loss mitigation policies are a "major roadblock" to restructuring mortgages, according to Neighborhood Assistance Corp. of America chief executive Bruce Marks who is urging Fannie's regulator to intervene. "We hope that you can make an immediate reversal of these policies," the NACA CEO says in a letter to Federal Housing Finance Agency director James Lockhart. According to NACA, Fannie won't reduce the interest rates below current market rates and will not reduce the principal amount to make the payments affordable. Fannie said it is starting to lower the interest rates temporarily to get borrowers back on track and extending the loan terms to make payments more affordable. Director Lockhart noted that Fannie is offering delinquent borrowers HomeSaver Advances and it is considering other innovative loan modification actions. The NACA CEO claims the HomeSaver program is "deceptive" because the arrearage is placed in an unsecured loan while nothing is done to restructure the mortgage. "It is deceptive to have the loan appear current when the payments continue to be unaffordable," Mr. Marks said.