The Federal Housing Finance Agency yesterday announced a mortgage relief/refinancing plan for troubled borrowers who have mortgages backed by Fannie Mae and Freddie Mac.
The plan would help borrowers who have missed at least three mortgage payments, who are owner-occupiers, and who have not yet filed for bankruptcy, renegotiate their mortgages down to a level where payments would only be 38 percent of their monthly gross incomes.
Given the state of the housing market and home finances, such renegotiations are overdue. The plan is a good start and should provide some help. However, because of the limited coverage of the plan, we shouldn't expect much help in the broader market.