Industry News

Freddie Mac to help troubled homeowners

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U.S. mortgage buyer Freddie Mac on Wednesday said it will purchase $20 billion in fixed-rate and hybrid adjustable-rate mortgage products to provide more stable financing alternatives for borrowers of high-risk subprime loans. The subprime lending segment has been in turmoil after rising defaults caused Wall Street investors to pull back on purchasing these loans, which in turn caused several subprime lenders to go out of business. A congressional committee held a hearing on Tuesday where the heads of Freddie Mac and Fannie Mae each said that the companies are developing new loan types to help distressed borrowers with high-risk mortgages to keep their homes. A key federal regulator during Tuesday's hearing also urged lenders to extend flexible terms to struggling borrowers. Freddie Mac's announced products, currently under development by the company and slated to be introduced by mid-summer, will limit payment shock by offering reduced adjustable-rate margins, longer fixed-rate terms ...