This week, Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, issued a statement that the FHFA would not direct the GSEs to implement the Home Affordable Modification Program Principal Reduction Alternative (HAMP PRA), which would have offered borrowers debt forgiveness.
In the statement, DeMarco says, “After extensive analysis of the revised HAMP PRA, including the determination by the Treasury Department to begin using Troubled Asset Relief Program (TARP) monies to make incentive payments to Fannie Mae and Freddie Mac, FHFA has concluded that the anticipated benefits do not outweigh the costs and risks. Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded that HAMP PRA did not clearly improve foreclosure avoidance while reducing costs to taxpayers relative to the approaches in place today.”
