No principal reduction for underwater Fannie and Freddie borrowers

New York /
Jul.July 31, 2012 04:30 PM

The acting head of the Federal Housing Finance Agency told Congress that the “anticipated benefits” of Obama’s Home Affordable Modification Program Principal Reduction Alternative do not outweigh the risks, Forbes reported.

Edward DeMarco, controversial acting director of the FHFA, which took over conservatorship for Fannie Mae and Freddie Mac in 2008, said that the two government sponsored enterprises will not participate in the program, which would allow underwater borrowers to write down what they owe.

Treasury Secretary Timothy Geitner disapproved, telling Congress that “as we have discussed many times, the use of targeted principal reduction by the GSEs would provide much needed help to a significant number of troubled homeowners, help repair the nation’s housing market, and result in a net benefit to taxpayers.”

In the past, DeMarco has said he was hesitant to grant principal reductions, Fannie and Freddie have been barred from allowing since DeMarco took over, because he believes it creates an incentive for borrowers to default. [Forbes] — Guelda Voien


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Latest fintech unicorn offers credit-score boost to renters
Latest fintech unicorn offers credit-score boost to renters
Latest fintech unicorn offers credit-score boost to renters
TRD Brand Studio: Your business, powered by The Real Deal
TRD Brand Studio: Your business, powered by The Real Deal
TRD Brand Studio: Your business, powered by The Real Deal
Marc Holliday, chairman and CEO, SL Green Realty Corp. (SL Green Realty Corp.)
Real estate bragging rights reach new heights
Real estate bragging rights reach new heights
Jason Rabin and 70 Cobb Road, Water Mill, NY (Google Maps, LinkedIn)
Southampton compound sells for $118.5M
Southampton compound sells for $118.5M
Jonathon Yormak,founder, managing principal, East End Capital; and map of 48-02 48th Avenue in Sunnyside Queens (East End Capital, Google Maps)
East End Capital bets on Sunnyside industrial
East End Capital bets on Sunnyside industrial
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...