Mortgage giants propose a rescue plan.

[evanovitch]

Fannie Mae and Freddie Mac, the mortgage-finance giants now controlled by the U.S. government, said Tuesday that they planned a broad new effort to reduce the loan burdens of homeowners facing foreclosure. <span style="font-weight: bold">The program will be offered to people who are at least 90 days behind on their payments and already have paid for the bulk of their mortgage</span>, according to government officials. The plan is to change the mortgage by reducing the interest rate so that the monthly loan payment is no higher than 38 percent of the borrower’s monthly income. <span style="font-weight: bold">The government plan could help as many as 300,000 families that are delinquent in their mortgage </span>payments at taxpayer expense, reports The Washington Post. <span style="font-weight: bold">But</span> people with knowledge of the details said Tuesday that it was more limited than a program advocated by Sheila Bair, chairman of the U.S. Federal Deposit Insurance Corp. The plan may apply only to so-called conforming mortgages that Fannie Mae and Freddie Mac have guaranteed. While there are trillions of dollars worth of those loans, they are far less than, and generally separate from, the bulk of subprime loans that are at the heart of the nation’s foreclosure crisis. The foreclosure rate on loans owned by Fannie Mae is about 1.72 percent. By contrast, the foreclosure rate on adjustable-rate subprime loans is nearly 20 percent, according to the Mortgage Bankers Association.