The Federal Housing Finance Agency acknowledges its mandate to offer the maximum assistance posible to distressed homeowners.  And, it conceds that principal reductions would provide much needed relief to negative equity homeowners.  However, it maintains that current loss mitigation tools in use allow it to fulfill its laudable mission without resorting to principal reductions to eliminate negative equity situations.

Among their current arsenal of Fannir Mae adn Freddie Mac mortgage loss mitigation tools, the FHFA insists that modification programs which offer interest only or negative amortization payments (without any reduction in the rate of interest earned by Fannie and Freddie, so, no refinancing please) result in the same amount of monthly payment reduction for underwater homeowners.  The negative amortization modifications are achieved without risking Fannie’s or Freddie’s tenuous (and illusory) grasp on liquidity (the reason they were brought under conservatorship in the first place).

Thus, Fannie/Freddie-instituted cramdowns will remain a distant dream for underwater homeowners barring the unlikely event of a congressional mandate in favor of the debtor class.

Here’s a link to the Jan 20, 2012 FHFA report…

http://www.fhfa.gov/webfiles/23056/PrincipalForgivenessltr12312.pdf

(Excerpts from firsttuesday)



4 Comments

  • You rock, dude! I am trying to find one thing I don’t agree about these legal issues, but how do you dispute with a professional? LOL… Great job as always!

  • I’m not that much of a online reader to be honest but your blogs really nice, keep it up! I’ll go ahead and bookmark your website to come back down the road. Many thanks

  • I appreciate your information . Nice Stuff theer.

  • I wanted to send you one little bit of word to say thanks a lot once again for the awesome concepts you’ve documented on this website. It has been really extremely open-handed of people like you to give freely precisely what a few individuals might have marketed as an e book to make some dough for their own end, most notably now that you could possibly have tried it in the event you desired. These ideas in addition acted as a good way to recognize that other people online have similar eagerness like mine to know the truth a great deal more pertaining to this condition. Certainly there are lots of more fun situations in the future for folks who examine your blog post.

Leave a Reply