Fannie Mae and Freddie Mac will not forgive principal on delinquent mortgages they guarantee even as the U.S. Treasury Department is offering incentive payments for writedowns, Bloomberg News reported yesterday. Months of analysis showed that there would be no clear benefit to taxpayers if the Federal Housing Finance Agency were to change its longstanding policy barring the government-owned mortgage-finance companies from loan modifications that include debt writedowns, Edward J. DeMarco, the agency’s acting director, said yesterday. "We concluded the potential benefit was too small and uncertain relative to unknown costs and risks," DeMarco said. The decision comes after months of mounting pressure to reverse the policy from activist groups and congressional Democrats, who touted it as a way to keep more families from losing their homes to foreclosure. FHFA has been in discussions since January with Treasury officials, who offered Fannie Mae and Freddie Mac as much as 63 cents for each dollar of principal reduction, using unspent funds from the Troubled Asset Relief Program.
