This is a silver lining in a dark cloud, Freddie Mac and Fannie Mae are suspending all foreclosures until January 9th.
Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, are suspending foreclosures beginning next week through Jan. 9.
Some details on the Freddie Mac/Fannie Mae restructuring plans:
Under the proposal, mortgage servicers will work with borrowers to reduce monthly payments to 38 percent of their gross income, a threshold of affordability, by lowering the principal, reducing interest rates and extending the length of the loan term. The plan doesn't include money from the Treasury's $700 billion bank rescue and isn't mandatory for companies that received federal aid.
Conditions and Fees
Homeowners that qualify will receive notices about the program. Their loan modifications won't become final until they have made three consecutive payments, and there is no limit to the number of times a loan can be modified. The new payment will include all of the borrower's monthly housing costs, such as taxes and condominium payments.
Mr Buffett, the celebrated "Sage of Omaha," believes that shareholders in the two mortgage companies look set to be wiped out as the pair attempt to raise more capital.
Henry Waxman is investigating whether the Bush Administration took a page out of Naomi Klein's book, "The Shock Doctrine" by deliberately precipitating a bear raid on Fannie Mae and Freddie Mac, according to the Washington Post.
Fannie Plan a `Disaster' to Rogers; Goldman Says Sell
They are short, at least there is a disclosure.
The U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac is an ``unmitigated disaster'' and the largest U.S. mortgage lenders are ``basically insolvent,'' according to investor Jim Rogers.
Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson's request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. Rogers is betting that Fannie Mae shares will keep tumbling.
Treasury Secretary Henry Paulson said the Bush administration plans to ask Congress to enact legislation to temporarily increase the line of credit that the companies have with the Treasury. It would also allow the Treasury to buy stock in the companies.
Paulson also said the Federal Reserve should be given a greater role supervising the finances of Fannie and Freddie.
In addition, the Federal Reserve announced Sunday that the mortgage finance companies can turn to the Federal Reserve Bank of New York for funds. The move gives Fannie and Freddie the same access to the funds as commercial banks and Wall Street firms. The agency granted investment banks such access earlier this year in the wake of a similar crisis of confidence when investors lost faith in Bear Stearns
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