GSE Principal Reduction Faces Possibilities, Challenges
April 1, 2016
The Federal Housing Finance Agency announced last week that it’s mulling over the idea of allowing principal reductions for underwater homeowners and it expects to make a decision, one way or the other, within the next couple of weeks But some say if implemented, the overall impact will be fairly muted. Back in 2012, the agency decided that limited principal reduction could save Fannie Mae and Freddie Mac money, but the plan didn’t have the support of former Acting Director Ed DeMarco, who said it could encourage voluntary loan defaults. Since that time, FHFA Director Mel Watt revealed in a recent speech last week that he’s been...