FHFA: Principal reduction would cost Fannie, Freddie $100 billion

The federal takeover of Fannie Mae and Freddie Mac was the placing into conservatorship of the government-sponsored enterprises (GSEs) Federal National Mortgage Association and federal home loan mortgage Corporation (Freddie Mac) by the U.S. Treasury in September 2008. It was one of the financial events among many in the ongoing subprime mortgage crisis.

Allowing Fannie and Freddie to participate in the principal reduction could save the GSEs $3.6 billion versus standard. the desired effect, the FHFA says, “thereby swamping any small but possible.

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The regulator for Fannie Mae and Freddie Mac told lawmakers that forcing the two mortgage firms to write down loan principal would require more than $100 billion in fresh taxpayer funds.

A massive principal reduction program applied to underwater loans held by Fannie Mae and Freddie Mac would cost the mortgage giants more than $100 billion, according to an analysis released by the.

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DeMarco has been publicly lowering expectations that the Treasury incentives will lead to a large-scale principal-reduction proposal. sent to Congress, FHFA said it would cost Fannie Mae and.

Principal Reduction Modification. The Federal Housing Finance Agency (FHFA) undertook an extensive evaluation to determine whether to implement a Principal Reduction Modification program for seriously delinquent, underwater borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac (the Enterprises).

I am writing in response to inquiries from you and other members of Congress, including the leadership of the Federal Housing Finance Agency’s (FHFA) oversight committees, regarding whether FHFA will authorize Fannie Mae and Freddie Mac (the Enterprises) to implement the Home Affordable Modification Program (HAMP) Principal Reduction.

Ideology and not economics may have killed a Fannie Mae principal reduction. Freddie Mac never installed such a program. Reducing principal for a wide-range of underwater borrowers back into.

DeMarco has opposed principal reductions for two reasons: first, because he thinks it would cost Freddie and Fannie too much up front, perhaps $100 billion; and second, because he believes. Thus, DeMarco went from arguing that principal reductions would damage the GSEs and cost $100 billion to speculating that the same reductions could actually stick an extra billion into the FHFA’s piggy bank.

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Forgiving mortgage debt on Fannie Mae and freddie mac loans would cost the taxpayer. the loans they secure. “FHFA estimates that principal forgiveness for all of these mortgages would require.

The Federal Housing Finance Agency announced the decision Tuesday after months of considering the option. The agency’s acting director, Edward DeMarco, has long opposed allowing Fannie and Freddie to.

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