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For seriously delinquent, underwater homeowners struggling
through the murky aftermath of the financial crisis, help is on
the way in the form of a gift from the Federal Housing Finance
Agency (FHFA).
According to
an announcement from the FHFA, Fannie
Mae and Freddie Mac will soon be required
to offer principal reduction to certain seriously
delinquent, underwater borrowers that are
grappling with the after-effects of the crisis.
e new offering, or the Principal Reduction
Modification program, is designed to help
struggling homeowners avoid foreclosure and
stay in their homes.
e modification program was approved
under FHFA's statutory authority in the
Emergency Economic Stabilization Act of 2008
"to implement a plan that seeks to maximize
assistance for homeowners and … minimize
foreclosures," including through a "reduction in
loan principal," while minimizing losses for the
Enterprises as well as other provisions of law.
FHFA Director Melvin L. Watt said,
"e national housing market has significantly
I N D U S T R Y I N S I G H T / B R I A N H O N E A
FHFA Announces
a Principal Reduction
Program to Assist
Delinquent, Underwater
Borrowers—But
How Much Relief Will
It Really Provide?
