Fed adopts policy to modify mortgages

Posted on January 28, 2009. Filed under: Foreclosure Defense, Loan Modification |

Jan. 27 (Bloomberg) — The Federal Reserve will ease terms on residential mortgages acquired in the rescues of Bear Stearns Cos. and American International Group Inc., seeking to stem foreclosures.

The Fed policy is targeting borrowers who are 60 days or more overdue on loan payments and covers modifications of interest rates and payment plans. The program uses the Fed’s authority in the $700 billion Troubled Asset Relief Program and was released today by the House Financial Services Committee.

“It reflects the understandable desire of the Federal Reserve to have some cooperation” with the Obama administration, House Financial Services Committee Chairman Barney Frank told reporters today in Washington. “This is a very big deal.”

Frank, a Massachusetts Democrat, and other leaders in Congress have criticized the Treasury for failing to act on the foreclosure-relief provisions in the TARP law Congress approved in October. This month, Congress released the remaining $350 billion in rescue funds to the Obama administration.

via Bloomberg.com: Worldwide.

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