Hundreds of thousands of homeowners facing foreclosure might get help by having the amount they owe reduced by Fannie Mae and Freddie Mac.
This is a hot topic in Washington, D.C., with many Democrats pushing for these so-called "principal reductions" to try to help the housing market. On Tuesday, a top federal regulator came a step closer to allowing the move.
The two most powerful entities in the housing market — Fannie Mae and Freddie Mac — could be on the verge of a significant change regarding foreclosures. NPR and ProPublica have learned that both firms have concluded that giving homeowners a big break on their mortgages would make good financial sense in many cases.
The U.S. Treasury said today that it had made $25 billion from the sale of mortgage-backed securities it bought back during the financial crisis. The Treasury said the sale was part of its effort to wind down the bailout programs.
Despite some green shoots in the economy, the housing sector remains weak. With 11 million Americans still underwater on their mortgages, some housing experts believe it's time for more dramatic solutions.
The idea of reducing the principal on the loans of underwater homeowners used to be a fringe concept, embraced by a few outliers. Today, many policymakers believe principal reduction is necessary to keep some troubled homeowners afloat.
But so far, the nation's biggest mortgage holders, Fannie Mae and Freddie Mac, haven't embraced the idea.