Wednesday, March 10, 2010

Principal Reduction plan coming to Fannie/Freddie soon?

From the Huffington Post:
A senior Treasury official told HuffPost on Monday that the department was heading towards more writing down of principal as part of its mortgage modification efforts, and that an announcement was to be expected in the next few weeks. But a Treasury spokesman e-mailed to say that Treasury was "NOT poised to roll out a major principal write-down program."

Anyone want to bet against Fannie/Freddie rolling out a principal reduction program and the Treasury backing them in the next few months? The above quote makes complete sense when taken in that context. That way the Treasury doesn't get blamed for supporting "moral hazard" but is still putting the taxpayer on the hook for bailing out homeowners. Treasury can say that Fannie/Freddie made the decision and Treasury merely is doing everything it can to keep Fannie/Freddie afloat to keep mortgage funding going.

3 comments:

Richie said...

Wow, that would be horrible if it happens. Nice way to screw over everybody who was fiscally prudent.

Maybe I can get a principal reduction on my car.

Noz said...

Why are you guys surprised?

Do you for a moment believe this wasn't orchestrated from the beginning?

Anonymous said...

Oh, thank good!
Richie,
If we want to stop foreclosures, this is the way to go. I am very fiscally prudent, but I don't want to owe $170,000 more than my house is worth. I can't move for a very long time because I can't sell, I also don't want to ruin my excellent credit by doing loan modification or short sale. Belive me you are not screwed, people whose homes lost more than 50% of their purchase price are.