An affordable Mortgage Plan for the U.S. is in the making

An affordable Mortgage Plan for the U.S. is in the making

U.S. working on affordable mortgage plan: sources
WASHINGTON (Reuters) - The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said on Wednesday.
The plan would see mortgage finance companies Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News) expand their purchase of mortgage securities to help drive down borrowing costs, the sources said.
The 4.5 percent target interest rate is roughly one percentage point lower than the average rate currently on a 30-year, fixed rate mortgage.
Both the mortgage giants, which finance or guarantee about half of all U.S. mortgages were effectively nationalized by regulators in September after losses on mortgages eroded their capital.
Since they were taken over, the two largest sources of U.S. mortgage finance have become tools for policymakers wishing to lower the cost of home loans and break a wave of foreclosures.