WASHINGTON (AP) — A federal regulator is standing by its decision to bar Fannie Mae and Freddie Mac from reducing principal for borrowers at risk of foreclosure, resisting pressure from the Obama administration.
The Federal Housing Finance Agency announced the decision Tuesday after months of considering the option.
The agency's acting director, Edward DeMarco, has long opposed allowing Fannie and Freddie to offer principal reduction. The Obama administration and some lawmakers have pushed for DeMarco to reconsider.
DeMarco said an extensive analysis by the FHFA found the potential benefit was too small compared with the costs and risks. The risks include as many as 19,000 borrowers strategically defaulting on their loans, according to the analysis.
About 1.4 million homeowners would be eligible for principal reductions from Fannie and Freddie.