UPDATE: FHFA's DeMarco Says Fannie Mae, Freddie Mac Won't Write Down Loans, Cites Risk-Reward; Insurers on Watch (MBI) (RDN)
Tweet Send to a Friend
(Updated - July 31, 2012 2:20 PM EDT)
Fannie Mae (OTCBB: FNMA) and Freddie Mac (OTCBB: FMCC) won't write down mortgage loans, according to FHFA's Ed DeMarco.
UPDATE - The call comes following pressure from the U.S. Treasury Department, which is offering incentive payments for write downs. Today, U.S. Treasury Secretary Tim Geithner stated, in a letter to DeMarco, "I do not believe it is the best decision for the country. The use of targeted principal reductions by the GSEs would provide much-needed help to a significant number of troubled homeowners."
DeMarco said a reduction in principal will not benefit taxpayers and it raises strategic default risk. Overall, a write-down has benefits that are too small when compared with risk uncertainty associated with the move.
Headlines come following reports Monday that FHFA forgiveness would benefit troubled borrowers.
Traders might keep an eye on mortgage insurers following the news. That list includes: MGIC Investment (NYSE: MTG), Radian Group (NYSE: RDN), MBIA (NYSE: MBI), and Old Republic (NYSE: ORI).
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
Fannie Mae (OTCBB: FNMA) and Freddie Mac (OTCBB: FMCC) won't write down mortgage loans, according to FHFA's Ed DeMarco.
UPDATE - The call comes following pressure from the U.S. Treasury Department, which is offering incentive payments for write downs. Today, U.S. Treasury Secretary Tim Geithner stated, in a letter to DeMarco, "I do not believe it is the best decision for the country. The use of targeted principal reductions by the GSEs would provide much-needed help to a significant number of troubled homeowners."
DeMarco said a reduction in principal will not benefit taxpayers and it raises strategic default risk. Overall, a write-down has benefits that are too small when compared with risk uncertainty associated with the move.
Headlines come following reports Monday that FHFA forgiveness would benefit troubled borrowers.
Traders might keep an eye on mortgage insurers following the news. That list includes: MGIC Investment (NYSE: MTG), Radian Group (NYSE: RDN), MBIA (NYSE: MBI), and Old Republic (NYSE: ORI).
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
You May Also Be Interested In
- J.P. Morgan (JPM) CEO Dimon Might Have Enough Votes to Stay Chairman - NY Times
- UPDATE: Move Inc (MOVE) Higher, Citron Says Long on Twitter
- Like Microsoft (MSFT) Xbox 360 Games? Don't Buy an Xbox One...
Create E-mail Alert Related Categories
Insiders' Blog, Trader TalkRelated Entities
Timothy Geithner
Login with Facebook
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
