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State officials criticize agency over loan modification policy

Attorneys general from nine states sent a letter to the president recently asking that he replace the current acting head of the Federal Housing Finance Agency.

The state officials are criticizing the acting regulator for the government-backed mortgage companies Fannie Mae and Freddie Mac, saying that the Federal Housing Finance Agency administrator is doing a disservice to the people by not allowing the mortgage companies to reduce principal amounts for struggling borrowers.

With Fannie Mae and Freddie Mac owning or backing 60 percent of the mortgages currently held in the United States, the attorney generals called inability to reduce principal amounts a "major impediment to addressing the foreclosure crisis."

The president has previously indicated that he may be nominating a replacement for the head of the Federal Housing Finance Agency, which prompted the attorneys general to write the letter expressing their views on how the current acting head is performing his job. Reducing the principals of distressed mortgages held or backed by Fannie Mae would cost taxpayers money, according to the acting director.

As many Tennessee borrowers are aware, loan modifications are one of the key ways to avoid foreclosure or bankruptcy. Reducing a high interest rate, spreading out payments over a longer period of time, or reducing the principal amount after changed circumstances are all useful tools to enable families to stay in their homes. However, these types of modifications can be difficult to access and secure without the assistance of an attorney, since bank representatives may promise one thing and do another, leaving homeowners with few options.

Source: Los Angeles Times, "9 state attorneys general want housing official DeMarco replaced" Jim Puzzanghera, March 19, 2013

Information about foreclosure defense for Tennessee homeowners can be found on our website.

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