Federal Reserve to Sponsor Limited Foreclosure Relief

The Associated Press reports that the Federal Reserve Bank will be offering a "relief plan" to qualified homeowners whose loans were guaranteed by Freddie Mac and Fannie Mae.  Under the Fed's new foreclosure prevention effort, homeowners may get a reduced interest rate, longer loan term or a lower total mortgage amount.  The Federal Reserve policy statement is set out in general terms at the Federal Reserve web site.

It is unclear exactly how the Fed's policy will be implemented, or when regulations and procedures will be published.    Further, according to the AP story, the amount of mortgage securities in question, valued at up to $74 billion, pales in comparison to the $1.75 trillion in outstanding risky loans, according to trade publication Inside Mortgage Finance.

It will be interesting to see if the Federal Reserve policy has any signfiicant impact on the foreclosure or bankruptcy rate.