The Federal Housing Finance Agency recently reported it would move to reduce the loan balances for thousands of borrowers who owe more than their homes are worth.
The agency, which regulates the government-controlled mortgage finance companies Fannie Mae and Freddie Mac
, said about 33,000 people were expected to be eligible for the principal reduction program. It will be a one-time offering for seriously delinquent borrowers, to help them with what the agency’s director, Melvin L. Watt, said “could well be their final opportunity to avoid foreclosure.”
Homeowners must meet certain criteria to qualify, including having an outstanding principal balance of $250,000 or less and being more than 90 days delinquent on mortgage payments as of March 1.
“The national housing market has significantly improved in recent years but there are still areas of the country where home values have not recovered and negative equity remains a real problem,” Mr. Watt said.