Categorized | Finance and Mortgage

Overseer of Fannie Mae and Freddie Mac Refuses to Reduce Principals

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The head of Fannie Mae and Freddie Mac has taken a great deal of heat from economists. Many economists have called for him to reduce the principals of those who owe more on their home than it is actually worth. They believe it will improve the economy, and most certainly the housing market. However, Edward DeMarco, the regular for the two mortgage giants continues to stand by his policy to leave the mortgage principals as they are.

 

As such, DeMarco has become public enemy number one for most economists, and anybody else with a vested interest in the housing market.

 

Private lenders, including Bank of America, agreed to reduce the principals for those faced with underwater mortgages. Only Fannie Mae and Freddic Mac have thus far refused to implement any sort of principal reduction plan due to the policies enforced by DeMarco.

 

Economists are not the only ones who are adamantly against DeMarco’s policy. Many government officials across the nation are calling for DeMarco to be replaced by somebody who recognizes the greatest needs of the housing market.

 

DeMarco has stated that a principal reduction would be the equivalent to a free lunch, and that such a reduction sounds far easier than it really is. He has also made it clear that he has no intention of stepping down, and plans to maintain his position for the long haul.

 

The Obama administration has also called for DeMarco to reduce the principal of those underwater, so as to possibly reduce the number of foreclosures.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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