Over 50 House members Monday urged Fannie Mae and Freddie Mac's regulator to allow principal reductions on mortgages held by the two government-sponsored enterprises.
In a letter to Edward DeMarco, the acting director of the Federal Housing Finance Agency, the lawmakers said the agency should take a bigger role in stemming the foreclosure crisis by "zealously" pursuing "all available legal claims to limit … losses" and "without regard to political considerations."
They charged that FHFA's opposition to principal modifications violates the agency's fiduciary duty to taxpayers to minimize losses.
"Sustainable mortgage modifications that avoid foreclosure will almost always reduce the loss to the enterprises," wrote the lawmakers, who included Rep. Barney Frank, the ranking Democrat on the Financial Services Committee. "Modifications that reduce principal result in far fewer new defaults and eventual foreclosures than modifications that only reduce interest, or worse, are simply payment schedules."
