The Obama administration is reportedly pressuring Fannie Mae and Freddie Mac to take part in the Federal Housing Administration's (FHA) short-refinance program.
According to an article published Wednesday in The Wall Street Journal, the government-sponsored enterprises' (GSEs) conservator, the Federal Housing Finance Agency, is encouraging the GSEs to join the program, which is designed to assist borrowers who are current but underwater on their mortgage.
The short-refi program requires lenders to write down the principal before refinancing a loan into an FHA product. The program launched in September and has received 61 applications to date, the Journal reports. Three modifications have been completed through the initiative.
The GSEs rarely agree to reduce principal when modifying loans. Fannie Mae has already declined to participate in the U.S. Treasury Department's principal-reduction program and has instructed servicers not to take part in similar programs that are administered by state housing finance agencies. Freddie Mac is deciding whether to join the Treasury program, The Wall Street Journal reports.
To read the entire report, click here.
SOURCE: Wall Street Journal