WASHINGTON, DC—The Center for American Progress has been arguing for the past year that widespread restructuring of defaulted and delinquent loans is critical to stabilizing the housing crisis and reducing downward pressure on home values. We are pleased to see that Federal Housing Finance Agency Director James Lockhart is considering broad loan modifications for the mortgages controlled by Fannie Mae and Freddie Mac, as CAP’s Andrew Jakabovics called for on Monday (reported in today’s American Banker—subscription required).
The complexities of the modern financial system, highlighted by the securitization process wherein rights to pieces of future mortgage payments are distributed widely, raise challenges that did not exist during the housing crisis of the Depression. These challenges can be overcome, as Senior Fellow Michael Barr testified before the Senate and as described in CAP’s Saving America’s Family Equity (SAFE) loan program. A more detailed version, which also addresses some of the potential legal issues, is available here.
CAP experts Andrew Jakabovics, associate director for the Economic Mobility Program, and Michael Barr and David Abromowitz, senior fellows, are available to comment on Fannie Mae, Freddie Mac, and the future role of GSEs in housing lending. To speak with any of them, please contact John Neurohr at 202-682-1611 or firstname.lastname@example.org.