HUD Secretary Donovan Calls On Fannie Mae And Freddie Mac To Do More For Troubled Homeowners

Government backed mortgage giants Fannie Mae and Freddie Mac — at the behest of their regulator, the Federal Housing Finance Agency, and its acting director, Edward DeMarco — have not been writing down loan principal for troubled homeowners, despite the view of many economists that doing so would aid the economic recovery. In an interview with the Wall Street Journal yesterday, Secretary of Housing and Urban Development Shaun Donovan called on Fannie and Freddie to begin providing such relief to homeowners. “More and more economists across the political spectrum are recognizing [principal reduction] is a critical step,” Donovan said. “Clearly it’s an important piece of the puzzle that Fannie and Freddie move forward on this.” In 2010, Fannie Mae actually had a plan in place to reduce loan principals, but “pulled the plug” on it due to opposition from its executives.