WASHINGTON (Reuters) ? The Obama administration on Friday expanded its main foreclosure prevention program and pushed to open it up to loans backed by mortgage giants Fannie Mae and Freddie Mac, a move that could meet resistance from their regulator.
In a joint announcement, the Treasury and Housing and Urban Development departments proposed using money from the Home Affordable Modification Program to provide incentives for Fannie Mae and Freddie Mac to reduce loan principal.
Government-controlled Fannie Mae and Freddie Mac own or guarantee about half of all U.S. home loans, and their participation in principal reduction could greatly expand the reach of the $29.9 billion HAMP program.
The proposal piles pressure on their regulator to allow the two government-sponsored enterprises, or GSEs, to do more for borrowers who have been hurt by declining home value.
The regulator has barred them from reducing principal out of concern it would raise costs to taxpayers, who have already dished out $169 billion to prop the firms up.
The depressed housing market is a concern for President Barack Obama, who faces re-election in November.
Obama made clear in his State of the Union address on Tuesday he would continue to press for more aggressive action to help homeowners. His position was in contrast to Republicans who are opposed to government intervention in the market.
As part of its announcement on Friday, the administration also said it was extending the life of the HAMP program for one additional year through 2013, and that it would open up the program to borrowers with higher debt-to-income levels.
Only about $3 billion has been spent of the $29 set aside for HAMP.
In addition, the administration said it was tripling the incentives paid to lenders who reduce mortgage principal.
Investors who rent out properties would also be able to access mortgage aid under the revamped program.
REGULATOR NEEDS TO SIGN OFF
For the proposal on Fannie Mae and Freddie Mac principal writedowns to work, their regulator, the Federal Housing Finance Agency, would need to first sign off.
However, FHFA Acting Director Edward DeMarco has said allowing for principal reduction on GSE loans would undercut his mandate to protect taxpayers.
"To encourage the GSEs to offer this assistance to its underwater borrowers, Treasury has notified the GSE's regulator, FHFA, that it will pay principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to forgive principal in conjunction with a HAMP modification," Treasury Assistant Secretary Timothy Massad said in a statement.
Obama said on Tuesday he planned to send legislation to Congress as soon as next week aimed at helping all homeowners take advantage of record-low borrowing costs through refinancing.
So far, the administration's series of mortgage relief programs that were introduced in 2009 have fallen far short of expectations.
When the administration launched HAMP in 2009, it expected as many as 4 million loans would be modified. So far, only about 900,000 households have won permanent mortgage modifications. The administration says those modifications have provided savings of about $500 every month for those borrowers.
The HAMP program, which draws from the Treasury Department's financial bailout fund, pays mortgage servicers to rewrite loan terms to reduce monthly payments.
The administration did not specify how much it would pay Fannie and Freddie to participate in HAMP.
(Reporting By Margaret Chadbourn, Editing by Andrea Ricci, Tim Ahmann and Andrew Hay)
pharrell pharrell silver bullet russell simmons russell simmons joseph kony joseph kony
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.