David H. Stevens, president and CEO of the Mortgage Bankers Association (MBA), today issued the following statement regarding the Federal Housing Finance Agency’s announcement that it would not endorse programs at Fannie Mae and Freddie Mac to write down mortgage principal for underwater borrowers.
“FHFA has made the determination that the long term national costs of a widespread principal reduction program are unlikely to outweigh what may be a short-term gain for a few select borrowers in certain states. We agree that principal forbearance can help borrowers realize a payment reduction in a similar way as principal reduction. It is critical to implement solutions that help the American homeowner without incurring the negative long-term impact of making credit less available and more expensive.
“We continue to express strong support for other actions the FHFA has taken to support the housing market, notably the HARP program which has lowered mortgage payments for more than a million underwater homeowners who have continued to make their payments through this tough time.
“Looking forward, we need to ensure that credit is available for potential homebuyers, and this is at risk with forthcoming regulations regarding the QM/Ability to Repay rule. Only when access to credit normalizes, will the housing market start growing again, and it is that market growth, and increasing home values, that will truly help underwater borrowers.”