FHFA-Proposed Rule Provides Credit For Loan Modifications

deral Housing Finance Agency (FHFA) has sent a proposed rule establishing 2009 housing goals for Fannie Mae and Freddie Mac to the Federal Register for publication. Loan modifications undertaken by the government-sponsored enterprises (GSEs) consistent with the administration's loan modification initiative would receive credit toward achievement of housing goals, according to the proposal. ‘The enterprises have taken the lead in implementing the administration's Home Affordable Modification Program," says FHFA Director James B. Lockhart. "By giving them goals credit for loan modifications, FHFA further encourages this important activity, which is essential to preventing foreclosures and keeping people in their homes. "FHFA has determined that, in light of current market conditions, the 2009 housing goal and home purchase subgoal levels previously established in regulation are not feasible unless they are adjusted," he continues. "Restrictions on the availability of private mortgage insurance for borrowers with lower down payments, a surge in refinancing, particularly by higher-income borrowers, the increasingly important role of [Federal Housing Administration] in the mortgage marketplace and a slowdown in the multifamily market, among other factors, mean fewer goals-qualifying loans in 2009." Under the Housing and Economic Recovery Act of 2008 (HERA), the housing goals established by the Department of Housing and Urban Development (HUD) for the GSEs for the year 2008 carry over to 2009. HERA also included a requirement that Lockhart, as FHFA director, review such goals to determine their feasibility given current market conditions and, as appropriate, make adjustments in the goals consistent with market conditions. The FHFA is proposing to adjust the overall 2009 Enterprise housing goals approximately to the levels that prevailed in 2004 through 2006. SOURC

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