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Fannie Mae and Freddie Mac will participate in a principal reduction program in Nevada, but it shouldn't be mistaken as a sign the mortgage giants will be installing a national program.
It really isn't even the beginning.
The GSEs joined a very similar program in California earlier in the month. Like that one, the Nevada program will use part of the $7.6 billion Hardest Hit Fund (which was launched nearly two years ago) to actually pay down the loans Fannie and Freddie own, according to a story in the Wall Street Journal.
The Federal Housing Finance Agency is still weighing whether it will allow the GSEs to participate in principal reduction under HAMP. But to qualify, borrowers have to miss mortgage payments. A study from the FHFA showed if less than 10% of the borrowers strategically defaulted to participate in such a program, the cost the GSEs would offset any money saved.
However, the Nevada and California initiatives require the borrower to be current. There are limits to household income as well.
There's still no word on when the FHFA will make a real policy shift. A decision was expected in April, but a month passed without word.
Meanwhile, principal reduction supporters are beginning to spend money campaigning to get it. The New Bottom Line and the Campaign for a Fair Settlement, two homeowner action groups, are spending $20,000 advertising on Facebook and Google in six swing states.
The FHFA actually seemed eager to participate in the Nevada and California programs, according to the Journal story.
But a real policy shift will take a bit more analysis.