By: Dylan Sikes - AllPennyStocks.com News

Thursday, December 15, 2016

The Financial services sector is gearing for a tectonic shift under the Trump presidency. The new president has elected Steve Mnuchin, an industry veteran as his Treasury Secretary. The nomination suggests that the financial markets may see some reforms, which may help them in generating more value. The upcoming administration is also expected to push for privatization of various businesses including house mortgage entities. Federal Home Loan Mortgage Corp. (OTCQB:FMCC) is one such concern which is likely to be highly impacted by upcoming change in the country’s administration. The mortgage company works under the status of Government Sponsored Enterprise or GSE. It offers a wide range of products related to the securitization of mortgage loans.

Freddie Mac announced the launch of its Freddie Mac Flex Modification foreclosure prevention program. The newly introduced scheme is designed to help customers in reducing their monthly mortgage payments by up to 20%. Freddie Mac designed the plan under the guidance of the Federal Housing Finance Agency (FHFA).

The new program emphasizes on five main factors which are accessibility, affordability, accountability, sustainability and transparency. David Lowman, executive vice president of Freddie Mac's Single-Family Business said that the new initiative will help his clients in avoiding foreclosures. He also added that the program offers appropriate balance ‘between borrower relief and economic responsibility.’

The new program may also aid Freddie Mac’s fortunes, as it may help in stemming the onslaught of foreclosures due to the borrowers’ inability to pay back. The scheme allows for higher percentage of payment discount to borrowers who are at least 60 days delinquents. Borrowers with current or shorter term delinquency are eligible for loan modification.

The proposed plan will replace Home Affordable Modification Program, which is scheduled to expire by the end of this year.

The coming days are likely to be challenging for the housing finance company. The upcoming Trump administration is likely to change the way Freddie Mac is being managed and operated. In an interview, Treasury Secretary-designate Steven Mnuchin eluded that the mortgage companies may be taken off of government control. He also stated that this needs to be done ‘reasonably fast.’

Freddie Mac and Fannie Mae are believed to account for nearly 60% of outstanding home mortgages in the country. While the process of privatizing Freddie Mac is going to be long drawn and complicated, it may prove to be beneficial for the stockholders.

For this purpose, the government will need to settle a number of lawsuits Freddie Mac is embroiled in. The settlement of these lawsuits will likely bring about stability to the organization. The organization will also be able to take more business-savvy decisions, once it is out of the government control, ultimately leading to better shareholder value.

The FMCC share price has shown an impressive 147% rise this year. With the new government and a different regulatory environment, the stock is expected to retain its bullish stance.

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