Fannie Mae and Freddie Mac aren’t going to be writing down loan balances any time soon unless someone else is willing to pay for it, the head of the firms’ federal regulator said on Thursday.
The Obama administration pressured the firms last fall to use a program that allows homeowners who owe more than their homes are worth to refinance into smaller government-backed loans. Under the program, Fannie and Freddie would have had to take a loss to get rid of the loan.
But those programs could lead to larger taxpayer losses in the near-term, said Edward DeMarco, the acting director of the Federal Housing Finance Agency. “It has been our conclusion that it is not loss minimizing for Fannie and Freddie” to do loan write-downs, he told lawmakers at a congressional hearing on Thursday.
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