The Obama Administration wanted the Federal Housing Finance Agency (FHFA) to offer consumers whose mortgage debt exceeded the value of their homes reductions on mortgage principal. As explained here, the FHFA has rejected that approach as a tool for helping ailing homeowners get out from under water. Here's an excerpt:
A key federal regulator has rejected a push by the Obama administration to reduce the mortgage debt of millions of distressed homeowners. It's a setback for the White House, which wants to reduce foreclosures to help the economic recovery. Edward DeMarco, acting director of the Federal Housing Finance Agency, said Tuesday that allowing up to 2.6 million borrowers who owe more than their houses are worth to have their mortgage principal reduced would end up costing taxpayers money and could encourage additional defaults. Fannie Mae and Freddie Mac, the housing finance giants seized by the government in 2008, own or back about 60% of the nation's mortgages. And although many banks are reducing mortgage principal for some delinquent borrowers, they are prohibited from taking that step with Fannie and Freddie loans. "We continue to share with everyone in government the goal of providing good opportunities to assist troubled borrowers, while protecting taxpayers," DeMarco told reporters Tuesday in announcing his decision after months of review. "The choices we've had to make are hard, but they need to be made."
Comments