FHFA Says Fannie, Freddie Won't Forgive Mortgages

Law360, New York (July 31, 2012, 6:54 PM EDT) -- Homeowners whose mortgages are owned by Freddie Mac or Fannie Mae will not be eligible for a White House program that would cut their principal balances, the agencies' regulator said on Tuesday, sparking immediate criticism from Treasury officials and some congressional Democrats.

The Federal Housing Finance Agency will not allow Fannie and Freddie to participate in the Home Affordable Modification Program Principal Reduction Alternative, or HAMP PRA, which permanently erases some principal loan amount for borrowers who owe more than their homes are worth.

“FHFA has...
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