Fannie, Freddie enact mortgage moratorium

Fannie Mae and Freddie Mac have told mortgage services to halt foreclosure sales on owner-occupied homes between Nov. 26 and July 9, 2009.

This moratorium is estimated to help more than 16,000 borrowers who would otherwise have been evicted during the holiday season.

Both companies ??? now owned by the federal government ??? say the moratorium will allow servicers to find the time to change the terms of mortgages that are now delinquent.

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Fannie and Freddie want the servicers to reduce interest rates, delay back payments and penalties, stretch the length of the loan or deferring payments on part of the principal.

All these methods are designed to lower the monthly payment until it is manageable ??? now more than 30 percent of the borrower???s pre-tax income.

Previous attempts to encourage work-outs have failed to curb foreclosures, which have been accelerating for the last year and a half.

Borrowers who have missed three months or more of payments are eligible, as long as they have not declared bankruptcy and are living in the homes.

Fannie Mae president and chief executive officer Herb Allison said in a statement: ???Until the streamlined modification program is fully implemented, we felt it was in the best interest of both borrowers and Fannie Mae to take this extra step to ensure that homeowners with the desire and ability to prevent a foreclosure have an opportunity to stay in their homes.???