Fannie and Freddie’s Regulator Opposes Reducing Mortgages for Struggling Homeowners

I was having a conversation with a colleague of mine asking who is the biggest problem when it comes to solving this mortgage crisis for homeowners.  I was referred to an article found written by Karen Weise at ProPublica.org.  It was an interesting read so I thought I would share some of it with you.  Read on....

The Obama administration has been pushing for banks and investors to cut mortgage balances for homeowners who owe more than their home is worth. But the regulator for the biggest investors of them all -- the government-controlled Fannie Mae and Freddie Mac -- won't let the two do it.
The administration and some banks themselves have increasingly seen reducing the size of a borrower's loan -- what's known as principal reduction -- as an important tool for helping the quarter of all homeowners who are underwater on their mortgages. The Treasury Department told ProPublica that the imbalance between what borrowers owe and what their homes are worth is one of the "main causes" of homeowners defaulting on their loans.
The administration sees principal reduction as a win-win, keeping families in their homes and allowing owners of the mortgages to recoup more money than they would through foreclosures. The logic is that if homeowners owe closer to what their home is actually worth, it decreases the likelihood they will default on the loan even after its modified.
Fannie and Freddie would seem to be the perfect players to promote principal reduction to prevent foreclosures. They're under government control, and they own or guarantee about half of the country's mortgages, meaning they pay the loss if a homeowner defaults. Because of that dominance, they also set the tone for how companies manage, or "service" in industry parlance, delinquent loans.
Who owns seriously delinquent Mortgages? 
Fred and Fannie                                                     1,390,000
Private Investors                                                    1,320,000
Banks                                                                       880,000
Other                                                                        810,000
Federal Housing Admin & Veterans Admin.                  660,000

John Taylor, the head of the nonprofit National Community Reinvestment Coalition, says Fannie and Freddie could easily and quickly affect the overall housing market. "They have the greatest authority and portfolio to make an impact," said Taylor. There are tens of thousands of loans "they can take care of tomorrow," he said.

But data show that Fannie and Freddie don't reduce principal, even if it might save them money in the long term. The reason: Their regulator won't let them. (The regulator, the Federal Housing Finance Agency, declined to comment.)
As Posted in and to read more go to www.propublica.org/article/Fannie and Freddie's Regulator Opposes Reducing Mortgagees for Struggling Homeowners

So the bottom line is we need the FHFA to allow Fannie and Freddie to reduce the principal and join in some of these programs and to start communicating with our Congressional Republicans who have been particularly vocal in pressuring the FHFA against doing principal reduction! Stop fighting the Adminstration who are trying to help and start working for the struggling homeowners! 

If you are in need for assistance with your loan modification or need some questions answered contact us.
For a free loan modification consultation go to http://www.jdssaysyes.com/