FHFA: Principal reduction would cost Fannie, Freddie $100 billion

News Update: FHFA releases bailout estimates for Fannie Mae, Freddie Mac The FHFA said it would cost Fannie Mae and Freddie Mac an additional $100 billion to write down all 3 million underwater loans to the value of the homes securing them. However, far fewer loans would actually be candidates for principal forgiveness, even if FHFA changes it policy.

Both GSEs owe the Treasury $151 billion in bailouts, and their regulator the federal housing finance Agency said a wide-scale principal reduction program would cost Fannie and Freddie $100 billion. Of the $29.9 billion allocated for HAMP and other housing programs, the Treasury has spent only $2.3 billion.

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A massive principal reduction program applied to underwater loans held by Fannie Mae and Freddie Mac would cost the mortgage giants more than $100 billion, according to an analysis released by the.

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 · It would cost Fannie Mae and Freddie Mac almost $100 billion to write down the principal on the underwater loans they control to current market values, according to a new estimate released by the Federal Housing Finance Agency.

 · Geithner: More Fannie reform details in spring. the two big mortgage firms are not participating in a government principal reduction program, and FHFA. -0.41% mortgages would cost $100.

After subtracting the cost to taxpayers of more than $1.7 billion in Treasury subsidies for principal reductions, the net benefit would be only about $100 million. not just the effect on Fannie and.

The critical point made in the Democratic Congressmen’s letter to FHFA is this: Director DeMarco’s widely reported claim that principal write-downs on Fannie and Freddie mortgages will cost taxpayers $100 billion is simply false. There are two reasons the statement is a complete misrepresentation.

“I join Secretary Geithner in urging that FHFA reconsider the decision to continue to refuse any principal reduction in Fannie’s and Freddie’s loan modification program.

FHFA refuses principal reduction for Fannie, Freddie. Thus, the net benefit to taxpayers would be $1 billion after the $3.6 billion in savings to Fannie and Freddie is factored in. (Click on the graph below to expand.) Less than 10% of the $29.9 billion Congress allocated to HAMP has been spent.

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