US FHFA: 'More Aggressive Action' Needed On Foreclosures

The conservator of Fannie Mae (FNM) and Freddie Mac (FRE) said in a report to Congress Thursday that the pair have been actively working to prevent foreclosures but that much remains to be done.

"As this report shows, progress is being made in modifying loans but much more aggressive action is needed to reach more troubled borrowers," said James B. Lockhart, director of the Federal Housing Finance Agency, Fannie and Freddie's conservator.

The mortgage giants' loan modifications for October and November of 2008 were up 50% from the previous two months, reflecting foreclosure freezes at both companies that gave them more time to revamp the terms of troubled loans, according to an earlier report from FHFA.

However, total loan modifications remained a small, albeit growing, fraction of foreclosure starts on the 30.6 million residential mortgages Fannie and Freddie own or guarantee. During October and November, they completed 13,891 loan modifications, or just 15% of the 90,913 foreclosure starts during the period.

-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629; [e-mail]

(Jessica Holzer contributed to this article.)