The Palm Beach Post reported today that the FDIC and Federal Reserve have asked lenders to work with homeowners who are struggling to pay their loans. Many consumers with subprime and hybrid mortgages have found themselves unable to pay their mortgage due to the higher interest rates incurred under the current terms of their mortgage. Current accounting and tax rules allow creditors to use flexibility and work with consumers who, under normal circumstances, are timely with their payments. The guidelines were prompted by President Bush’s announcement Friday to proactively preempt further defaults over the next couple of years. Two million mortgages are expected to move from low interest rates to higher unaffordable rates by 2008. Some strategies mentioned to ward of defaults included modifying the terms of the loan, deferring payments or converting adjustable mortgages to fixed rate mortgages. Possible extension of the term of the loan and including missed payments into the loan for repayment.