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Government controlled mortgage finance companies Fannie Mae and Freddie Mac said Wednesday they will buy back troubled loans contained in securities they have already sold to investors.
The two companies are repurchasing mortgage loans for which borrowers have missed at least four months of payments. At the end of last year, Fannie had about $127 billion of such loans, while Freddie Mac had about $70 billion.
The two companies guarantee the mortgage securities they sell to investors. Buying the delinquent loans back would cost less than making those guarantee payments, both companies said.
Fannie Mae, based in Washington, and its McLean, Va., rival Freddie Mac have been run under tight government oversight since they almost collapsed in September 2008. They have required $111 billion in federal aid to stay afloat.
Fannie Mae, Freddie Mac Will Buy Back Delinquent Home Loans
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