Fannie Mae, Freddie Mac won’t be allowed to reduce loan balances for troubled borrowers
The federal regulator for government-backed mortgage giants Fannie Mae and Freddie Mac said Tuesday that he will not allow the firms to reduce loan balances of struggling homeowners, frustrating the Obama administration as it looks for ways to boost a floundering economy.
Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA), said the agency’s analysis showed no sure-fire financial benefit to letting some mortgage holders reduce their loan amounts. He also warned that such a move could cause some borrowers to default intentionally in hopes of getting taxpayer aid.
“We concluded that the potential benefit was too small and uncertain relative to the known and unknown costs and risks,” DeMarco told reporters after a months-long agency analysis.
DeMarco’s decision came despite prolonged pressure from the Obama administration, Democratic lawmakers on Capitol Hill and housing advocates, who argued that principal reduction is an essential tool in softening the fallout of the housing crash.
And Admin issues a Memo....
Treasury Secretary Timothy F. Geithner chastised DeMarco for his decision in a letter Tuesday, even as he acknowledged DeMarco’s right to forbid principal reduction in his role as independent regulator for Fannie and Freddie.
“Five years into the housing crisis, millions of homeowners are still struggling to stay in their homes and the legacy of the crisis continues to weigh on the market,” Geithner wrote. “You have the power to help more struggling homeowners and help heal the remaining damage from the housing crisis.”
Okay, Fannie and Freddie are "independent" (right...) But how does an "acting director" suffer a
stinging memo from Timmy and survive or not be immediately replaced?
Excuse me?
He also warned that such a move could cause some borrowers to default intentionally in hopes of getting taxpayer aid.
Haven't seen the banksters doing the perp walk lately, anyone else? Or did I miss it?
More muck in the works of turning this economy around and the enemy is us (?) --- despite the President's efforts seems there's more than Repugs obstructing...
Not good, not good at all....