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And another plan for Fannie Mae and Freddie Mac the federal housing finance administration is about to announce announce a new mortgage modification program.
Peter Barnes is in DC with the feels like it's gonna mean another bill for the tax -- -- that the taxpayers -- backing this one way or another Melissa let me walk you through it here.
This is the government regulator of Fannie and Freddie is expected to announce as early as tomorrow but by the end of this month.
That the mortgage giants will start allowing limited principal reduction to some homeowners are underwater on their loans to give them a lower monthly payment.
And Edward DeMarco the acting administrator of the federal housing finance administration.
He's the one speaking at a housing sum -- tomorrow he's resisted.
Allowing debt forgiveness on loans held or insured by Fannie and Freddie to limit taxpayer bailouts of these two companies so far.
-- your call taxpayers have invested more than a 180 billion dollars in them.
But tomorrow industry sources say DeMarco.
Is expected to announce that he will let Fannie and Freddie to participate for the first time in -- Treasury Department program to reduce mortgage debt it's funded.
I'm more than twenty billion dollars of tax Payer bailout money left over in that.
The idea here is that Fannie and Freddie and the taxpayers could make more money.
If the underwater homeowner -- -- -- so there is no fire sale of the property.
But DeMarco is expected to require other types of loan modifications first like.
Lower interest payments before allowing Fannie and Freddie customers to qualify for debt forgiveness.
I think when you put those constraints on it you're gonna find that very few bars why actually qualify.
Says so the question is why go ahead -- program that may be modest in scope.
I think that this will reduce the political pressure on FHFA fraction enormously.
Now Fannie and Freddie have millions of underwater loans but -- -- expects only maybe tens of thousands of customers will be able to participate in the debt forgiveness program and even then.
They might see principal reduction -- maybe 10% or so on average but now it it's a psychological thing.
Think there's hope that you could sell your house down the road right and pay -- your mortgage may make a profit.
We'll say it I think yes like everything.
I don't -- it it it sounds like it may not reach that many people how are you gonna find out who can take advantage of the program how can I find out I qualify.
Well we're gonna get the details probably we expect the details tomorrow.
But you first -- I have to find out if you have a Fannie or Freddie insured or -- -- -- -- and for that.
You got a call your mortgage service company the bank that you pay a monthly payment -- they'll be able to tell idea and then when we get the details.
They'll probably be like a hardship test of some kind I'm told them so that again may limit the availability of this program.
To people but -- wants to limit.
Potential taxpayer losses to so break that is that's -- big priority.
Yeah I mean I guess everybody talks about moral hazard with this one -- -- -- gives you an incentive to not pay your loan if you think it's gonna get reduced in the same time at the taxpayers kind of on the hook either way.
For the mortgage getting some of the money back is better than not getting any of it.
I don't now it's.
That's got a top four that's that that's the girl that's the gamble that after all the nice yeah.
We -- currently is staying your home if you think may be you can get out from under the rock -- -- mostly are right here aren't can't wait for more details thank you so analyst at banks.
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