The heads of Freddie Mac and Fannie Mae, the two giant government-sponsored mortgage backers, announced today to a congressional committee that they’re developing new types of loans that would help homeowners facing foreclosure stay in their homes. Such options could include lowering their current payments by extending the length of time borrowers have to pay back their loans.

The announcement to the House Financial Services Committee came in response to swirling concerns and soaring default rates among loans that were made to consumers with poor credit, commonly called subprime.

Sheila Bair, chairman of the Federal Deposit Insurance Corp., urged mortgage lenders to be flexible when dealing with distressed homeowners in these subprime loans — lenders should help them refinance wherever possible, she said.

From the Associated Press story, which includes a really helpful explanation of the subprime mess:

Many of those borrowers “could avoid foreclosure if they were offered (loans) that allow for affordable mortgage payments,” Bair testified. “Restructuring their loans into more affordable products, especially 30-year fixed-rate mortgages, would bring them back to good standing, allow them to repair their credit histories and dampen the impact that foreclosures may have on the broader housing market.”

KELLY BENNETT

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