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Principal writedown11/30/2022 "But that does not mean that we are not making great efforts to assist troubled homeowners in underwater mortgages that have the ability to meet a mortgage obligation."ĭeMarco argues it doesn't matter how home loans are restructured, so long as the payment amount decreases. "There is one form of loan modification are not pursuing, and that's principal forgiveness," DeMarco says. DeMarco says Fannie and Freddie have modified more than 1 million loans using various means other than principal reduction. The FHFA took over Fannie and Freddie in conservatorship three years ago, when the financial crisis prompted a massive bailout of the two companies.ĭeMarco, along with Donovan, spoke in Washington Wednesday at an event co-sponsored by the National Journal. There is one form of loan modification are not pursuing, and that's principal forgiveness.Įdward DeMarco, Federal Housing Finance Agency Directorīut the approach has its critics, including the Obama administration's own acting director of the Federal Housing Finance Agency, Edward DeMarco. "That can be good both for homeowners and for taxpayers." "We do think principal reduction is a step that's important," Donovan said Wednesday. Housing and Urban Development Secretary Shaun Donovan has argued in favor of Fannie and Freddie writing down principal for homeowners. Today, many policymakers believe principal reduction is necessary to keep some troubled homeowners afloat.īut so far, the nation's biggest mortgage holders, Fannie Mae and Freddie Mac, haven't embraced the idea. The idea of reducing the principal on the loans of underwater homeowners used to be a fringe concept, embraced by a few outliers. With 11 million Americans still underwater on their mortgages, some housing experts believe it's time for more dramatic solutions. But two of the nation's largest mortgage holders, Fannie Mae and Freddie Mac, have not signed on to the idea.ĭespite some green shoots in the economy, the housing sector remains weak. Many experts say reducing mortgage principal can help troubled homeowners stay in their homes.
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