Fannie Mae and Freddie Mac will reduce principal or interest rates on some loans and extend the terms of others The Federal Housing Finance Agency said. JPMorgan Chase & Co., the biggest U.S. bank, said last month it would stop foreclosures on some loans as it works to make payments easier on $110 billion of problem mortgages, while Bank of America Corp. said it has modified 226,000 loans this year. Citigroup, the fourth-largest U.S. bank by market value, will contact about 500,000 homeowners with $20 billion in mortgages during the next six months, the New York-based company said in a statement today. A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on during the third quarter, the most since records began in January 2005, data compiled by RealtyTrac Inc. in Irvine, California. The Fannie Mae and Freddie Mac plan won't include money from the Treasury's $700 billion bank rescue package. President-elect Barack Obama, in his first news conference , called on the Treasury and other government agencies to ``use the substantial authority that they already have to help families avoid foreclosure and stay in their homes.'' The JPMorgan program is designed to assist 400,000 families with $70 billion in loans in the next two years. Bank of America, based in Charlotte, North Carolina, announced two plans this year to help reduce customers' payments by as much as $11 billion. In total, they will cover more than $120 billion in unpaid balances. Countrywide Financial Corp., the mortgage lender acquired by Bank of America, agreed in October to help about 400,000 customers facing foreclosure or having problems paying their loans as part of settlement with 14 states over fraud complaints. Citit bank The New York-based bank has launched its so-called “Citi Homeowner Assistance” program, which over the next six months, will reach out to 500,000 at-risk homeowners who are not currently delinquent, but may need assistance in remaining that way. States like Florida, California and other high-cost real estate markets will likely benefit the most. Under the proposal, mortgage servicers will work with borrowers to reduce monthly payments to 38 percent of their gross income, a level considered a threshold for affordability, using a combination of lower principals, interest-rate reductions and extensions. ``As we lend and invest hundreds of billions of dollars to help institutions suffering leveraged losses from defaulting mortgages, we must also devote some of that money to fixing the front-end problem: too many unaffordable home loans.'' Federal Deposit Insurance Corp. Chairman Sheila Bair said.
