Credit union trade organizations say they are still reviewing the details regarding a plan from Fannie Mae and Freddie Mac that would allow principal forgiveness for underwater borrowers on the difference between their property's value and mortgage balance.
According to a report Monday from Bloomberg, current borrowers who can prove they have a valid need to move – to take a new job or deal with a serious illness, for example – would become eligible in March to apply for a deed-in-lieu transaction that would eliminate the loan's underwater balance so the homeowners could sell their properties. The program would require a 55% debt-to-income ratio.
NAFCU President/CEO Fred Becker said his trade group will evaluate the impact the action would have on credit unions, with a special focus on whether the action would precipitate strategic defaults.
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