The controversial principal reduction program announced by the Federal Housing Finance Agency last week is expected to moderately increase expenses for mortgage servicers who handle delinquent Fannie Mae or Freddie Mac loans, but overall the impact of the program on servicers is expected to be minimal, according to a report from Fitch Ratings on Monday.
Factors that will limit the impact of the principal reduction program on servicers include: the number of underwater homeowners has been greatly reduced by home price appreciation; many underwater or delinquent borrowers have already been helped by government programs such as HARP and HAMP; non-agency mortgages are ineligible; and servicers have only a brief window for solicitation of eligible borrowers for the program.
Presidential candidates have been largely silent about housing policy during their campaigns, with the exception of Hillary Clinton. Now Democratic presidential hopeful Senator Bernie Sanders, a Democrat from Vermont, is offering a plan of his own to address the affordable housing crisis in the United States. Sanders’ plan includes expanding the National Affordable Housing Trust Fund, raising the minimum wage, defending fair housing laws, credit score reform, and expanding HUD’s assistance programs.