ARLINGTON, Va.–Saying the move sets a “dangerous precedent,” NAFCU is stating its opposition to the Federal Housing Finance Administration announcing that Fannie Mae and Freddie Mac will offer a one-time principal reduction to an estimated 33,000 seriously delinquent, underwater borrowers.
“We fail to see how principal reduction will do anything to strengthen the housing market. NAFCU has always supported protecting consumers, but we believe principal reduction sets a dangerous precedent,” said NAFCU President and CEO Dan Berger. “Credit unions have a strong history to doing everything they can to keep members in their homes.”
According to FHFA, about 33,000 borrowers will be eligible for a principal reduction modification under the program. Servicers must solicit eligible borrowers no later than Oct. 15, 2016.
FHFA says the modification will be available to owner-occupant borrowers who are 90 days or more delinquent as of March 1, 2016; whose mortgages have an outstanding unpaid principal balance of $250,000 or less; and whose mark-to-market loan-to-value ratios exceed 115%. Other eligibility criteria apply.