Mortgage giants Fannie Mae and Freddie Mac have new programs to help troubled subprime borrowers avoid foreclosure. Fannie Mae’s new program is called “HomeStay”. The program will offer troubled borrowers a range of workout solutions, looser credit requirements and ways to shed subprime mortgages before payments spike.
Subprime mortgages made homeownership affordable for many borrowers who had spotty credit histories. However, the low early payments of those adjustable-rate mortgage (ARM) loans often climbed sharply within a few years and subprime mortgage delinquencies have risen in recent months.
Freddie Mac is helping out with new programs released this year. These programs will offer services and products that will help troubled subprime borrowers ease into a mortgage that they can afford. In addition, Freddie Mac is working on a major effort to develop more consumer-friendly subprime products that will provide stable financing alternatives going forward.