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Sunday, May 25, 2008

Rescue for struggling mortgage borrowers

May 25 2008
A key Senate panel approved Tuesday last week a $300 billion homeowner rescue plan to provide cheaper, government-backed mortgages to as many as 500,000 struggling borrowers. The legislation also includes tougher federal oversight of Fannie Mae and Freddie Mac. The rescue plan would be financed with a share of the two companies' profits. The two government-sponsored enterprises would finance a new affordable housing fund -- intended to aid low-income people -- that temporarily would be used to pay for the homeowner rescue. After posting a first-quarter loss of $2.2 billion amid rising mortgage defaults, Fannie Mae's CEO told its shareholders Tuesday that home prices could fall as much as 25 percent before the worst is over.

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