We are deeply disappointed by today’s announcement by Federal Housing Finance Agency Acting Director Edward DeMarco that he will continue to prohibit Fannie Mae and Freddie Mac from participating in the Obama Administration’s mortgage principal reduction program.  DeMarco’s decision is irresponsible.

As Treasury Secretary Tim Geithner has observed, providing principal reduction for struggling homeowners is also in the best interests of taxpayers. The Federal Housing Finance Agency’s own analysis has found that participating in the program could save $3.6 billion for Fannie Mae and Freddie Mac and $1 billion for the taxpayers.

The combination of a real estate bust, high unemployment, and falling real wages has created the perfect storm for homeowners.  Millions of working families owe more on their mortgages than their homes are worth.  The U.S. economy cannot recover until decisive action is taken to address the housing and foreclosure crisis.

Principal reduction is the most effective way to prevent foreclosures, stabilize housing prices, and get our economy working again.  By refusing to allow Fannie Mae and Freddie Mac to engage in principal reduction, DeMarco will deny relief to as many as half a million struggling homeowners.

Despite today’s setback, we will continue to work with the Obama Administration to fight to make assistance available to struggling homeowners.  We need federal housing policies that will help make it possible for working families to own their homes, not short-sighted polices that protect the interests of bankers and Wall Street.

Contact: Jeff Hauser (202) 637-5018