Mortgage Principal Reduction Plan Too Costly, FHFA Says

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mortgage principal reductionA massive principal reduction program applied to underwater loans held by Fannie Mae and Freddie Mac would cost the mortgage giants more than $100 billion, says to an analysis released Monday by the Federal Housing Finance Agency.

The FHFA disclosed the analysis, conducted in 2010, in response to Democrats' requests made last week. They asked House oversight committee chair Rep. Darrell Issa (R-Calif.) to subpoena the agency since it failed to send the analysis as requested last year.

FHFA Acting Director Edward DeMarco has long said a principal reduction program on GSE loans would cost taxpayers too much. As of the end of the third quarter, Fannie and Freddie already owe a combined $151 billion in bailouts to the government.

Read the full story at HousingWire.

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