25 March 2012

Fannie and Freddie: Slashing Mortgages Is Good Business

by Jesse Eisinger, ProPublica, and Chris Arnold, NPR March 23, 2012, 5 a.m.
Update: On Friday, following the publication of this story by ProPublica and NPR, lawmakers called on the Federal Housing Finance Administration to provide Congress with the new analyses on principal reductions by Fannie Mae and Freddie Mac. In addition, Illinois Attorney General Lisa Madigan urged FHFA to immediately implement appropriate principal reductions to home loans held by Fannie Mae and Freddie Mac.
A version of this story was co-published with NPR News and broadcast on NPR's Morning Edition.

New analyses by mortgage giants Freddie Mac and Fannie Mae have added an explosive new dimension to one of the most politically charged debates about the housing crisis: Whether to reduce the amount of money beleaguered homeowners owe on their mortgages.

Their conclusion: Such loan forgiveness wouldn’t just help keep hundreds of thousands of families in their homes, it would also save Freddie and Fannie money. That, in turn, would help taxpayers, who bailed out the companies at a cost of more than $150 billion and are still on the hook for future losses.

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