The Federal Housing Finance Agency said that as of June 30, Fannie Mae and Freddie Mac guaranteed nearly 3 million mortgages on single family homes that are underwater, or worth less than the loans they secure.
Nearly 80 percent of the Fannie Mae and Freddie Mac borrowers with negative equity were current on their payments, said FHFA Acting Director Edward J. DeMarco.
“FHFA estimates that principal forgiveness for all of these mortgages would require funding of almost $100 billion,” according to DeMarco in a Jan. 20 letter the FHFA posted on its website today.
DeMarco, whose agency was created by Congress to minimize losses at Fannie Mae and Freddie Mac and is independent of President Barack Obama’s administration, has maintained that principal forgiveness would increase the size of the government’s bailout of the companies, which have cost taxpayers more than $153 billion since they were taken under government control in 2008.
The agency compared the cost of principal forgiveness to the companies’ current practice of forbearance, which allows delinquent borrowers to defer payments.
“Given that any money spent on this endeavor would ultimately come from taxpayers and given that our analysis does not indicate a preservation of assets for Fannie Mae and Freddie Mac (FMCC) substantial enough to offset costs, an expenditure of this nature at this time would, in my judgment, require congressional action,” he said.
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