New analyses by mortgage giants Freddie Mac and Fannie Mae have added an explosive new dimension to one of the most politically charged debates about the housing crisis: Whether to reduce the amount of money beleaguered homeowners owe on their mortgages.
Their conclusion: Such loan forgiveness wouldn't just help keep hundreds of thousands of families in their homes, it would also save Freddie and Fannie money. That, in turn, would help taxpayers, who bailed out the companies at a cost of more than $150 billion and are still on the hook for future losses.
The analyses, which have not been made public, were recently presented to the agency that controls the companies, the Federal Housing Finance Agency, according to two people familiar with the matter. Freddie Mac's meeting with the FHFA took place last week.
The decision of whether to allow such reductions rests with Edward DeMarco, the acting director of the FHFA, who has steadfastly opposed so-called principal reductions on the grounds that it's a bad business decision for the companies and would cost taxpayers money.
Many economists and policy makers contend that cutting principal — the amount of money lent to the homeowner — is one of the best solutions for keeping people in their homes and to bolster the fragile economic recovery.
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6 comments:
Completely bad idea.
I bought a modest sized house, that I could afford. I get nothing.
The person down the street who bought an extravagant house they could not afford -- my tax money goes to pay down his principal so he can stay in it.
Socialism needs to end RIGHT NOW. I'm tired of paying for everyone else's problems.
Yeah, what he said! We bought a house we could pay for. Why should we bail out an idiot who overspent on his house?
You know there are people that could afford their
houses but either the husband or wife lost their
job thanks to Obama. So now they have only have
half as much income than they did have. So now
they are losing their house. And a lot of these are modest homes not mansions at all.
Wow. I might be able to keep my house
So once again, I get screwed. I'm the guy that did it right all these years. I bought my first house in 1986 with 20% down and a 11.5% mortgage. I have had 4 different houses over the years as I've had to move with the job. In all the years I've never even been a day late with a payment.
Now Johnny come lately buys a McMansion with nothing down, has two new cars in the driveway, takes a cruise to Aruba every year, can't pay his mortgage and I'm supposed to bail him out?
I can only take so much!
When does the the war start?
I've paid my modest sized home off,but if this comes to pass I'll be glad to loan myself so much money that I will be underwater with no possibility of repayment.I will stand in line for a principle deduction.I like this program more every minute.What a country.
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