April 11th: 6 Things Compliance Officers Must Know Today: Regulatory Roundup

    

1. Federal Housing Finance Agency

The head regulator for Fannie Mae and Freddie Mac believes it makes sense for the mortgage giants to reduce the loan balances of struggling homeowners.

The Washington Post reports that FHFA acting director Ed DeMarco thinks the GSE's can save close to $2 billion by relying on so-called 'enhanced incentives' from the Treasury Department to write down these loans. Translation: the Treasury will issue more debt to finance this play and we the taxpayer will foot the bill for another bailout of flailing lenders.

According to the Post’s story, the regulator has been looking into the effect of “more generous principal-reduction” that was also being pushed by President Obama. Of course, this creates the potential of a moral hazard where other homeowners stop paying their loans on time in a play to get into the game.

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