Federal Housing Finance Agency Acting Director Edward J. DeMarco said Tuesday in a statement that he will not support mortgage forgiveness at Fannie Mae or Freddie Mac as part of a Home Affordable Modification Program.
“FHFA has concluded that the anticipated benefits do not outweigh the costs and risks,” DeMarco said. “Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded that HAMP Principal Reduction Alternative did not clearly improve foreclosure avoidance while reducing costs to taxpayers relative to the approaches in place today.”
DeMarco said he has previewed for Congress several housing-related initiatives to strengthen the loss mitigation and borrower assistance efforts of Fannie Mae and Freddie Mac as well as improve the operation of the housing finance market. Those initiatives include new and consistent policies for lender representations and warranties, alignment and simplification of the Enterprise short sales programs, and further enhancements for borrowers looking to refinance their mortgages.
David H. Stevens, president/ CEO of the Mortgage Bankers Association, said in a statement that he agrees with DeMarco’s position.
“FHFA has made the determination that the long term national costs of a widespread principal reduction program are unlikely to outweigh what may be a short-term gain for a few select borrowers in certain states,” Stevens said. “We agree that principal forbearance can help borrowers realize a payment reduction in a similar way as principal reduction. It is critical to implement solutions that help the American homeowner without incurring the negative long-term impact of making credit less available and more expensive.”