Government-sponsored enterprises Fannie Mae and Freddie Mac are expected to announce a program to help homeowners modify loans and prevent foreclosures, according to the Wall Street Journal, who cited unnamed U.S. officials.

The program, expected to be announced at 2 p.m. EST, would be an extension of the Hope Now Alliance, the co-operative effort created in August 2007 which aims at preventing foreclosures.

By targeting loans that are past due, the new approach would attempt "to speed up the modification of hundreds of thousands of loans held by the housing finance giants, marking the latest effort to try and prevent more foreclosures," the Wall Street Journal reported on Tuesday. The unnamed officials said the government is aiming to bring the ratio of household debt for participating borrowers down to 38%.

Under the modified loan process, lenders would be allowed to modify delinquent loans by establishing criteria to speed up the process, according to the Associated Press.

It was announced on Monday that Fannie Mae lost $29 billion in the third quarter, and the GSE may need an infusion of cash from the Treasury before the year ends.

Reuters said Fannie could need up $100 billion to stop the company from selling off its assets to pay creditors.

No official word on the matter has come from Fannie Mae or Freddie Mac yet.

By Patrick McGee and edited by Nancy Girgis
©CEP News Ltd. 2008