[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Tuesday, 17 April 2007, 20:41 GMT 21:41 UK
Effort to ease US mortgage woes
US houses
The general US housing market has seen a slowdown
US mortgage giants Fannie Mae and Freddie Mac are developing new types of loans to help borrowers with high-risk mortgages avoid losing their homes.

The move comes amid turmoil in the sub-prime lending market, which offers higher priced loans to people with low wages or poor credit histories.

With US home repossessions hitting a record high last year, the situation has caused concern on Wall Street.

The two firms are looking at "more consumer-friendly sub-prime products".

'Challenging task'

Sub-prime mortgages are typically variable rate, starting with a low interest rate which can then rise sharply.

Fannie Mae and Freddie Mac said they were aiming to introduce new 30-year, and possibly 40-year, fixed rate deals, with the chance for existing sub-prime customers to switch.

Their announcement came after a high-level group of mortgage industry executives, federal officials and bankers met to discuss the difficulty in the sub-prime market.

They have agreed on a goal of keeping deserving borrowers with high-risk mortgages in their homes.

"It is going to be a very challenging task...we've not going to be able to save everybody," said Sheila Bair, chairman of the Federal Deposit Insurance Corporation.

The downturn in the sub-prime market has led to a number of specialist firms in the sector also falling into financial difficulty.

New Century Financial, one of the largest sub-prime lenders in the US, filed for Chapter 11 bankruptcy protection earlier this month.

Wall Street is concerned that the weakness in the sub-prime market, which is also reflected in a general slump in the US housing market, could spread over into the wider economy.


SEE ALSO
Sub-prime crisis sours US dream
05 Apr 07 |  Business
Top US lender in Chapter 11 move
02 Apr 07 |  Business
Sub-prime firm sells $2.7bn loans
16 Mar 07 |  Business
Wall St hit by home payment fears
13 Mar 07 |  Business
US probes sub-prime mortgage firm
13 Mar 07 |  Business
Q&A: Sub-prime lending
14 Mar 07 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific