Gainesville – Principal Loan Reduction
Last Thursday, eleven Democratic Attorney generals sent a letter to the Federal Housing Finance Agency (FHFA) requesting for an abrupt implementation of principal loan reduction by GSE- related mortgages.
The letter was addressed to the agency’s acting director, Edward DeMarco. It argues that principal forgiveness could not shake the financial stability of Fannie Mae and Freddie Mac, and it could even save as much as $1.7 billion.
DeMarco announced last week that it is possible that FHFA would come up with the mortgage principal forgiveness plan come this April. FHFA is currently in the process of making evaluations for added incentives from the Treasury Department so as to write-down the loan principal under the Home Affordable Modification Program – HAMP.
However, after the preliminary analysis have been released last Tuesday, mortgage policy analyst has have contradicting expectations on principal loan reduction by Fannie Mae and Freddie Mac.
The letter further stated that the incentive payments to investors in return for allowing forgiveness under the Home Affordable Modification Program – HAMP have been increased and because of this, concerns on the potential impact on the financial stability of GSEs should lessen. It added that principal forgiveness programs will greatly help borrowers, communities, and the creditor’s revenue.
The Attorney Generals highlighted that in the past five years, more than five million people lost their homes due to foreclosure. They also emphasized that Fannie and Freddie Mac, having owned the majority of the nation’s home loans, should lead the move on loan modifications so as to uplift the general housing economy and not serve as hindrance.
It was the Attorney Generals of California, Delaware, Illinois, Iowa, Maryland, Minnesota, New Mexico, New York, Oregon and Vermont who have signed the above-mentioned letter.
This is the second letter sent to DeMarco within the past two months. The letter added more facts to the first letter sent and is now supported by 10 more attorneys general, proving a growing consensus around this issue.
We remember that last February, the attorney general of Massachusetts, Martha Coakley, urged the FHFA to allow for principal loan reduction to increase loan modifications and help strengthen the housing economy.
This could help Gainesville Homeowners facing foreclosure work out options to stay in their home. We will need to watch the outcome closely!
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Call Stephanie Anson today at 352-260-0153 for a confidential phone interview regarding your options.
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