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Take a Load Off, Fannie: A Bold Plan to Boost Housing
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Take a Load Off, Fannie: A Bold Plan to Boost Housing

David Abromowitz and John Griffith discuss the benefits of principal reduction for homeowners and lenders alike.

There’s a growing consensus among economists, investors, academics, and consumer advocates that more "principal reduction" — writing off a portion of a mortgage that exceeds a home’s value in exchange for a higher likelihood of repayment — can help avoid another wave of costly and economy-crushing foreclosures. That’s good for homeowners and lenders, and because millions of underwater mortgages are controlled by the government, it’s also good public policy.

But the country’s two biggest mortgage companies are not convinced, according to Edward DeMarco, acting director of the Federal Housing Finance Agency — which oversees the government-controlled mortgage giants Fannie Mae and Freddie Mac.

The above excerpt was originally published in The Atlantic. Click here to view the full article.

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Authors

David M. Abromowitz

Senior Fellow

John Griffith

Policy Analyst

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