Fannie Mae (FNM) and Freddie Mac (FRE) extended their freeze on evictions through the end of February and said they would begin granting month-to-month leases to tenants of foreclosed properties.

Freddie Mac said it would go further and allow certain former homeowners to convert to renters under a new program. Freddie Mac also said it would explore whether former owners that were foreclosed upon might be able to hang onto their homes by reinstating their mortgage at modified terms.

"In about half of foreclosure sales there is no conversation between the borrower and the mortgage servicer about workouts," Ingrid Beckles, Freddie's senior vice president of default asset management, said in a statement.

The mortgage giants announced the moves in separate press releases Friday. Each company's moratorium on foreclosures for the loans it owns or guarantees was set to expire this coming Saturday.

Fannie Mae said it would offer month-to-month leases only to tenants of single-family foreclosed properties. Freddie, meanwhile, did not say its policy would exclude multi-family properties.

Freddie said tenants and former owners must demonstrate they have the income to pay the monthly rent. For tenants, the amount would be based on market rents or the amount the tenant was paying prior to foreclosure, whichever is lower. Former owner-occupants would be offered month-to-month leases based on market rates. -By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com

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