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Tuesday, November 8 2011 - By Kay Lynn Clay
California's GA wants Fannie Mae and Freddie Mac to reduce its mortgage principals.
California Attorney General Kamala Harris is demanding Ed DeMarco, the head of the Federal Housing Finance Agency, to grant principal reductions on mortgages tied to Fannie Mae and Freddie Mac. To Harris, reducing principals on mortgages is the only way to protect homeowners from foreclosure, as the initiative would align mortgage values with actual home values.
Housing Wire reported that Harris is not alone in her call for principal reductions. Greg Lippman, former Deutsche Bank trader, has also supported efforts to forgive mortgage debt in certain circumstances. However, government officials do not share sentiment as Harris and Lippman. Michael Williams, CEO of Fannie Mae, told the news source in September that the government-sponsored lender had no plans to reduce mortgage principals, while the CEO of Freddie MAc, Ed Hadelman, also said reducing principals does not make sense for the lender. According to Politico, DeMarco, whom Harris is demanding reduce principals, is obligated to protect the assets of both Fannie Mae and Freddie Mac, Therefore, DeMarco and the FHFA cannot implement housing market stimulus efforts if they add to the tally of losses for either lender. This can prevent principals from being reduced, as the initiative could result in greater losses for Fannie Mae and Freddie Mac. More News |
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