FHFA Decision to Refuse Principal Forgiveness for Fannie and Freddie Loans Called “Unacceptable” by AG Coakley
BOSTON – In response to the decision by the Federal Housing Finance Agency (FHFA) to refuse to implement principal forgiveness for borrowers at risk of foreclosure, Attorney General Martha Coakley issued the following statement:
“With this decision, the FHFA is failing to act in the best interests of homeowners, investors and our nation’s economy, and does a grave disservice to the 60-precent of borrowers nationwide unfortunate enough to have their loans serviced through Fannie or Freddie.
“Principal forgiveness, guided by net present value analysis, is an essential tool to avoid unnecessary foreclosures. FHFA’s decision is unacceptable and all the more reason why we will continue to pursue settlements and advocate for public policies with a focus on objective standards for achieving broad-based, sustainable loan modifications.”
In April, AG Coakley sent a second letter to Acting Director Ed DeMarco’s that urged the FHFA to change its position regarding principal forgiveness for loans held by Fannie Mae and Freddie Mac.
The Legislature on Thursday sent a bill to the Governor that will prevent unnecessary and unlawful foreclosures. The bill filed in January 2011 by AG Coakley would establish standards that require banks to analyze every loan prior to proceeding with a foreclosure and offer a reasonable loan modification where the analysis shows modifying the loan is more beneficial for the bank than foreclosure.