Viable Principle Reduction Plan Would Likely Have Limitations -CoreLogic

By Jann Swanson

Posted To: MND NewsWire

Among the most contentious issues at the Federal Housing Finance Agency (FHFA) when Edward J. DeMarco was its acting director was his refusal to allow Fannie Mae and Freddie Mac (the GSEs) to adopt a principal reduction (or PR) program, citing FHFA’s duty as their conservator to protect their assets. His opposition continued even as the Treasury Department offered incentives to lenders through the Home Affordable Modification Program (HAMP) it co-sponsors with FHFA. This provoked considerable friction between the acting director and many members of Congress. After he was replaced by Melvin L. Watt as permanent director in January 2014, principal reduction fell out of the news. Housing advocates expected Watt to reverse DeMarco’s policy, permitting Fannie Mae and Freddie Mac to employ PR as…(read more)

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