Fannie-Freddie regulator studying loan reductions
Source: Huffington Post
WASHINGTON — The federal regulator who oversees Fannie Mae and Freddie Mac is softening his position against allowing the mortgage giants to reduce principal for U.S. borrowers at risk of foreclosure.
Edward DeMarco, acting director of the Federal Housing Finance Agency, said in a speech Tuesday that the agency is considering whether to allow Fannie and Freddie to offer principal reductions. And he noted that mortgage principal reductions would lower Fannie and Freddie losses and help stabilize home prices faster.
Yet DeMarco still says the agency must weigh the reductions against losses to taxpayers, who already have spent $170 billion to bail out the companies. Allowing reductions could lead to a rise in borrowers who strategically default on their loans, he warns. And fewer than 1 million homeowners would be eligible for principal reductions – a fraction of the estimated 11 million Americans who owe more on their mortgages than their homes are worth, he added.
Read more: http://www.huffingtonpost.com/huff-wires/20120410/us-fannie-freddie-mortgage-aid/
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