The regulator for mortgage finance companies Fannie Mae and Freddie Mac said it would unveil on Tuesday a new loan modification program that is meant to make mortgage payments more affordable and prevent foreclosures, Reuters reported.
Sources had told Reuters on Monday that under the plan, mortgage servicers will lower a homeowner's monthly payments to affordable levels if such a move will keep those borrowers in their homes.
Payments that do not exceed 38 percent of a borrower's income will be considered affordable, the sources said.
Officials from the Federal Housing Finance Agency and the Treasury and representatives from the mortgage lending industry will hold a news conference on the plan at 2 p.m. EDT.
Since Fannie Mae and Freddie Mac are the nation's two largest mortgage finance companies, their business practices often become the industry standard. Policy-makers hope the new plan will encourage other mortgage finance companies to show forbearance on troubled loans.