Fannie and Freddie Won't Forgive Mortgage Debt. Here's the Problem

The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, won't allow homeowners to get forgiveness on their mortgages even if they owe substantially more on their homes than they are worth, The Huffington Post's Ben Hallman reports. Leaders of FHFA think that giving debt forgiveness to some homeowners would encourage other people to stop paying their mortgages in order to get debt forgiveness too. But the Congressional Budget Office has found that principal reduction plan could help 1.2 million borrowers save their homes and also save Fannie and Freddie, as well as taxpayers, $2.8 billion, Hallman reports.