AG Also Continues Push For Fannie And Freddie To Implement Principal Forgiveness
BOSTON – Fannie Mae and Freddie Mac will be required to offer commercially reasonable loan modifications under Massachusetts’ recently passed loan modification statute, Attorney General Martha Coakley stated today in a letter sent to the government sponsored mortgage giants. In the letter, Coakley also continued to urge FHFA to reconsider its position and engage in principal reduction for struggling borrowers.
The letter was sent today to Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency. The Massachusetts law, signed by Governor Deval Patrick on August 3, requires creditors to take commercially reasonable steps to avoid foreclosure upon certain mortgage loans. Recently, the Federal Housing Finance Agency (FHFA), that manages Fannie Mae and Freddie Mac, officially refused to practice principal forgiveness.
“We expect Fannie Mae and Freddie Mac, like all creditors, to comply with these statutory obligations as they conduct business in Massachusetts,” AG Coakley said in the letter. “Specifically, we expect that Fannie Mae and Freddie Mac will pursue common-sense loan modifications for borrowers when the economic benefits of a modified loan exceed the significant losses anticipated at foreclosure. These loan modifications are critical to assisting distressed homeowners, avoiding unnecessary foreclosures, and restoring a healthy economy in our Commonwealth.”
The letter both highlights the imperative nature of preventing unnecessary foreclosures and FHFA’s steadfast refusal to use principal reduction as a critical foreclosure avoidance tool.
[MASS.gov]
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