Edward DeMarco, the acting director of the Federal Housing Finance Agency (FHFA), has changed his mind about offering a definitive answer on whether his agency would reconfigure its policy that prevents principal reductions on mortgages owned by the government-sponsored enterprises.
Earlier this month, DeMarco stated the FHFA was analyzing the possibility of principal reductions and offer a final decision on the issue by the end of this month. On Friday afternoon, however, an FHFA spokesperson responded to a Bloomberg News inquiry on the status of the promised final decision by saying the matter ‘is being deferred’ while the agency ‘continues to work on its principal forgiveness analysis.’ No explanation was given on why the matter was deferred.
DeMarco has been under growing pressure from the Obama administration, congressional Democrats, state attorneys general and the International Monetary Fund to withdraw the FHFA's long-standing refusal to allow principal reduction. One member of Congress, Rep. Zoe Lofgren, D-Calif., has gone so far as to call DeMarco an idiot for not reducing principal, while others – most notably Rep. Barney Frank, D-Mass. – have openly suggested that DeMarco be removed from office.
Update: As of Monday morning, the FHFA's website did not include a formal statement on this subject. After this news story was published, the FHFA contacted MortgageOrb and provided the text of the full statement that was cited in the Bloomberg News coverage.
‘FHFA continues to work on its principal forgiveness analysis and is in discussions with the Department of the Treasury,’ says the agency in its statement. ‘A final determination on the Treasury proposal for triple investor incentives for HAMP Principal Reduction Alternative (PRA) is being deferred until we conclude these activities.’