Following the United States Treasury Department’s move this week to take control of mortgage investors Fannie Mae and Freddie Mac, a handful of U.S. senators Thursday showed support for a moratorium on foreclosures for loans within the two companies’ portfolios.
Primary sponsors of the foreclosure freeze included New York Sen. Chuck Schumer, Ohio Sen. Sherrod Brown, New Jersey Sen. Robert Menendez, and Pennsylvania Sen. Robert Casey — all Democrats. The move “would provide immediate relief to many homeowners’‘ and let Fan and Fred “turn these non-performing loans into performing assets to minimize losses,” said Schumer and Menendez in a letter to the companies and the Federal Housing Finance Agency, according to several news reports. The FHFA will oversee the two mortgage investors under the government conservatorship announced Sunday by Treasury Secy. Henry Paulson. The senators also urged the companies to change their policies on modifying mortgages.
Is this simply a “gas-tax holiday,” stopgap approach to long-term solutions that benefit the homeowners in danger of losing their houses, or will Congress offer a robust examination of the housing market, loans held by Fannie and Freddie, and enable the ability for homeowners to restructure their mortgages? Bloomberg News reported that if the freeze is implemented, it would last “at least” 90 days. Can Congress, in roughly three months, come close to finding real solutions while maintaining the fundamental missions of Fannie and Freddie?