Released: November 30, 2008

Mortgage lenders become proactive

Source: Bob Tedeschi, New York Times (Free Registration)

A YEAR ago, most home foreclosures were concentrated in depressed manufacturing areas of the Midwest and the speculative real estate zones of Florida, Arizona and California. Most other regions were experiencing only modest increases because the unemployment rate — the most common trigger of mortgage default — was relatively low.

Now, with the economy in full retreat and the jobless rate rising, borrowers and lenders in areas with previously marginal foreclosure rates are bracing for the worst.

As a result, the banking industry has taken pre-emptive measures to help borrowers. The best example is an initiative, announced this month, to help those who took out loans backed by Fannie Mae and Freddie Mac, the government-owned companies that buy conventional mortgages from a wide swath of lenders. The companies’ loans make up about 58 percent of single-family mortgages nationwide.

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