As economists and financial experts attempt to forecast what terrorists' attacks portend for the national economy, housing agencies and mortgage lenders were lining up to help preserve a bright economic future for home owning families.

In some small way, given the relatively limited number of people affected, the moves could help shore up failing consumer confidence that has some economic analysts worried.

U.S. Housing and Urban Development Secretary Mel Martinez announced days after terrorist attacks in New York and Washington, D.C., that he will direct all Federal Housing Administration-approved lenders to provide relief to families who have FHA-insured mortgages and who also have been affected by the recent terrorist attacks.

He specifically asked lenders not to start or threaten foreclosure for at least 90 days, while the families are recovering from the financial problems caused by the loss of a family member or other related events.

Martinez also asked all mortgage lenders, including those not insured by FHA, to consider providing similar relief.

The Mortgage Bankers Association of America, a 2,800-member mortgage banking trade association, said it supports the federal action.

"We join with Secretary Martinez in support of these actions. We will work together with our members on this important effort," said association president Andrew Woodward.

Meanwhile The Federal Reserve is encouraging state member banks and bank holding companies to work with customers directly or indirectly affected by terrorists' hijackings and attacks.

It suggested extending loan terms and restructuring debt for those who may need financial help.

"In particular banking organizations are encouraged to take prudent steps to make credit available to sound borrowers, while taking into account current conditions in considering adjustments to the original terms and conditions of customers' loans or transactions," the Fed said.

"Such cooperative efforts can ease pressures on borrowers, improve their capacity to service debt, and strengthen the organization's ability to collect on its loans," it added.

By week's end both Fannie Mae and Freddie Mac posted information about mortgage assistance for those in need.

Similar to relief provided following natural disasters, Fannie Mae suggested its lenders, on a case-by-case basis, temporarily suspend or reduce mortgage payments or create longer loan payback plans, resulting in a lower monthly payment.

It also said mortgage servicers should be available to counsel borrowers about other payment options and loan workouts.

Freddie Mac's "Peace of Mind Plan" offers similar mortgage relief provisions including some directed specifically at firemen, police, and other emergency personnel actively engaged in rescue operations at the World Trade Center, the Pentagon, and air crash sites.

Freddie Mac also said it is extending a foreclosure moratorium to all its mortgages until September 25, 2001, with a moratorium in effect until October 1 for the East Coast and California, where most of the families affected by the attack live.

"We will not add to the hardships and uncertainties facing the many people who have already lost so much," explained Leland C. Brendsel, chairman and CEO of Freddie Mac.

"We will work with our lenders and we will find a way to ensure that the borrowers who have lost their loved ones or their jobs will not lose their homes because of these horrific acts," Brendsel added.

That should be some positive news for the sluggish economy, kept afloat largely by the impact of housing-related consumer spending, which accounts for as much as two thirds of the gross domestic product.

"While some pause in consumer spending and business investment is likely, the efforts of all levels of governments to return to normality and response of people and officials in New York and Washington strongly suggest that economic effects will be limited in duration and scope," said David M. Blitzer, managing director and chief investment strategist at Standard & Poor's.

"The largest factor in the economy's recent weakness was weak investment spending after the 1990's technology boom. Consumers have been a positive factor in the economy," he added.

For more articles by Broderick Perkins, please press here.

Published: September 17, 2001

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.