Fannie-Freddie regulator studying loan reductions
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 speech Tuesday that the agency is considering whether to allow Fannie and Freddie to offer principal reductions. That's a subtle shift from his firm opposition to the concept.
DeMarco still says the agency must weigh the reductions against losses to taxpayers, who already have spent $170 billion to bail out the companies. And he's also cautioning that allowing reductions could lead to a rise in borrowers who strategically default on their loans.
A spokeswoman for the agency said DeMarco's long-standing resistance to allowing principal write-downs hasn't changed.
Still, his willingness to consider the concept suggests he may be feeling pressure from lawmakers and officials in the Obama administration, who have pushed for principal reductions by Fannie and Freddie.
U.S. Rep. Elijah Cummings, D-Md., said he was "encouraged that Mr. DeMarco has now begun to move in this direction."
Cummings and others say Fannie and Freddie's efforts to help homeowners who owe more on their mortgages than their homes are worth have fallen short.
Treasury Secretary Timothy Geithner told a Senate subcommittee last month that he thought officials at Fannie and Freddie support the idea of principal write-downs, despite DeMarco's reservations.
Geithner called DeMarco a "little more conservative" on the issue.
MSN.ca Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
How long does it take you to completely unpack after moving in?
Thanks for being one of the first people to vote. Results will be available soon. Check for results
- 3 days – I'm an unpacking MACHINE!
- I need a full month just to figure out where to put everything!
- 3 months – I use the boxes as end tables!
- NEVER! I still haven't unpacked everything from the last move.