Loan servicers and investors are feeling the heat to reduce underwater homeowners' loan balances, but don't count on the two mortgage giants to lend a hand.
Fannie Mae and Freddie Mac, which are controlled by the federal government, do not lower the principal on the loans they back, instead opting for interest rate reductions and term extensions when modifying loans.
The housing crisis has already wreaked havoc on the pair's balance sheets. Between them, they have received $127 billion -- and recently requested another $19 billion -- from the Treasury Department since they were placed into conservatorship in September 2008, at the height of the financial crisis.
"Treasury has to bite the bullet and get Fannies and Freddie to Participate. It's all Treasury money one way or the other." [law professor at Valparaiso University, Alan White]
The loan modifications programs and procedures keep changing constantly. It is my guess that Fannie and Freddie will come around sooner or later.
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
We Also Suggest:
- Bank of America's Balance Liquidation Program (BLP) Still Sucks
- What's the Best Way to Pay off My Credit Card Debt If I Have a High FICO Credit Score ?
- How did This Economic Crisis Start?
- Should I Use My 401K to Pay Off My Mortgage?
- Should I Take Out a 401K Loan to Pay Off My Credit Cards?
- Follow my journey to pay off debt and subscribe by email.
- Subscribe in a Reader (RSS)
- Follow us on Twitter
- Follow us on Blogger
No comments:
Post a Comment