Regulator rebuffs government mortgage write-down plan


Posted on Jul 31, 2012

The top housing regulator rejected the offer of taxpayer funds to reduce mortgages held by struggling homeowners on Tuesday, a blow to the Obama administration which is keen to show voters it can help fix the housing market.

Calling it a challenging decision, the regulator for Fannie Mae and Freddie Mac stated that utilizing funds from the Troubled Asset Relief Program would not make a meaningful improvement in reducing foreclosures in a cost-effective way for taxpayers.

"The anticipated benefits do not outweigh the costs and risks," stated Federal Housing Finance Agency's head Edward DeMarco.

The administration has been pressuring DeMarco to allow the government-controlled mortgage financing agencies to do more principal writedowns. But DeMarco has maintained that this would needlessly drive up the costs of their taxpayer bailout.

Fannie Mae and Freddie Mac, whose government bailout has meant taxpayers have provided nearly $190 billion to keep them afloat, were seized by the government in 2008 amid threats of insolvency due to losses on subprime loans.

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