WASHINGTON (Dallas Morning News) – In an effort to push down mounting foreclosures, Fannie Mae and Freddie Mac announced on Tuesday a new mortgage program that would expedite the process for modifying loans, which could help hundreds of thousands of homeowners avoid foreclosure.

Qualifying borrowers would have their interest rates lowered or loan principal reduced. But they would eventually have to pay back the full loan, either by extending the life of the payments or adding a one-time payment when the house is sold. Monthly payments would not exceed 38 percent of a household’s income.

Borrowers would have to show that they can afford a new loan, but they wouldn’t have to undergo the underwriting and credit-score process.

To qualify for the loan program:

  • mortgages must be owned or guaranteed by Fannie Mae and Freddie Mac, who own or guarantee 51 percent of the country’s single-family mortgages;
  • borrowers must have missed three or more payments; and
  • borrowers must contact their mortgage servicer and provide the household’s monthly gross income, any association dues or fees, and proof of recent job loss or economic hardship.