Report: Fannie, Freddie Pressed on Underwater Mortgages

Wednesday, 08 Dec 2010 07:30 AM

 

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Fannie Mae and Freddie Mac are in discussions with U.S. government officials to join government programs aimed at reducing mortgage balances where borrowers owe more than the values of their homes, the Wall Street Journal reported, citing people familiar with the situation.

The newspaper reported that Fannie Mae and Freddie Mac have been highly reluctant to reduce mortgage balances, especially for borrowers who are still making payments.

Any deal to write down so-called underwater loans could reduce the threat to the U.S. housing market from the glut of homeowners believed at risk of default should their personal finances or home prices worsen, the Journal reported.

A deal would deepen losses at Fannie Mae and Freddie Mac, which already have cost taxpayers about $134 billion, the Journal reported.

The report also said the government is pressuring both mortgage companies to join a program run by the Federal Housing Administration that allows banks and other creditors, which agree to write down mortgages, to hand off the reduced loans to the FHA.

© 2014 Thomson/Reuters. All rights reserved.

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