Federal Housing Regulator Finally Shows Some Openness To Reducing Loan Amounts For Troubled Homeowners

Federal Housing Finance Agency Director Edward DeMarco has faced a wave of criticism for his staunch opposition to allowing government backed mortgage giants Fannie Mae and Freddie Mac — which the FHFA oversees — to reduce loan amounts for troubled homeowners. DeMarco has been claiming, contrary to the view of many economists, that reducing loan principal would hurt Fannie and Freddie’s bottom lines. Today, however, he finally signaled some openness to allowing Fannie and Freddie to reduce loan amounts, citing a preliminary analysis that incorporates new financial incentives for principal reduction that were introduced by the Treasury Department.