WASHINGTON, July 31 (UPI) -- The head of the Federal Housing Finance Agency said Tuesday he would not budge on his stance against principle reduction for troubled mortgages.
"After extensive analysis ... including the determination by the Treasury Department to begin using Troubled Asset Relief Program monies to make incentive payments to Fannie Mae and Freddie Mac, FHFA has concluded that the anticipated benefits do not outweigh the costs and risks" of participating in the Home Affordable Modification Program Principle Reduction Alternative, Acting Director Edward Demarco said.
Freddie Mac and Fannie Mae are, respectively, the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association.
The two government-sponsored banks were taken over by the government at the height of the financial crisis.
Since becoming acting director, Demarco has stonewalled the Obama administration on the HAMP PRA program, believing that using bailout funds to reduce principle on homes underwater -- homes worth less than what is owed on the mortgage -- would be harmful to taxpayers.
"Today, I provided a response to numerous congressional inquiries," Demarco said.
"Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded that HAMP PRA did not clearly improve foreclosure avoidance while reducing costs to taxpayers relative to the approaches in place today," he said in a statement.