About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs
Filed under Government Mortgage Financing Programs News

The heads of Fannie Mae and Freddie Mac have recently indicated they are not high on the idea of principal write downs at all. This should come as no surprise to anyone. The problem with principal write-downs is that they are a Pandora’s Box for banks and investors. If lenders started forgiving principal for borrowers they would open a massive flood that could bury them. There are millions of underwater homeowners in the US. The majority of those homeowners are not willing to consider walking away from their homes. A foreclosure or short sale severely damages credit scores and that is something most borrowers would like to avoid. The banks benefit greatly from this fact. If banks and investors started offering principal write-downs they would certainly be overrun with requests and would have to deal with billions of losses that they currently are avoiding.

So while politicians like to make noise about principal reductions, banks and investors like Fannie and Freddie will continue to show zero interest in the concept in most cases.

However there are several refinance programs available that do help families. Contact us in the sidebar to learn more about those.

Comments (2) Posted by G.R.A. Admin on Monday, May 16th, 2011

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