Federal Housing Finance Agency Acting Director Edward J.DeMarco said Tuesday in a statement that he will not supportmortgage forgiveness at Fannie Mae or Freddie Mac as part of aHome Affordable Modification Program.

“FHFA has concluded that the anticipated benefits do notoutweigh the costs and risks,” DeMarco said. “Given our multipleresponsibilities to conserve the assets of Fannie Mae and FreddieMac, maximize assistance to homeowners to avoid foreclosures, andminimize the expense of such assistance to taxpayers, FHFAconcluded that HAMP Principal Reduction Alternative did not clearly improveforeclosure avoidance while reducing costs to taxpayers relative tothe approaches in place today.”

DeMarco said he has previewed for Congress severalhousing-related initiatives to strengthen the loss mitigation andborrower assistance efforts of Fannie Mae and Freddie Mac as wellas improve the operation of the housing finance market. Thoseinitiatives include new and consistent policies for lenderrepresentations and warranties, alignment and simplification of theEnterprise short sales programs, and further enhancements forborrowers looking to refinance their mortgages.

David H. Stevens, president/ CEO of the Mortgage BankersAssociation, said in a statement that he agrees with DeMarco'sposition.

“FHFA has made the determination that the long term nationalcosts of a widespread principal reduction program are unlikely tooutweigh what may be a short-term gain for a few select borrowersin certain states,” Stevens said. “We agree thatprincipal forbearance can help borrowers realize a paymentreduction in a similar way as principal reduction. It is criticalto implement solutions that help the American homeowner withoutincurring the negative long-term impact of making credit lessavailable and more expensive.”