In a rare victory for proponents of principal reduction, Fannie Mae and Freddie Mac said they will immediately allow their borrowers to participate in Keep Your Home California and other states’ Hardest Hit Fund programs that shrink the mortgages of troubled borrowers using taxpayer funds.
California officials made a significant change to the program last year, dropping a requirement that banks match taxpayer funds when homeowners receive mortgage reductions through the program. That means Fannie and Freddie will not have to incur further losses on their loans. The two mortgage giants have now released guidance to the mortgage companies that work with them, signaling they would allow Fannie and Freddie borrowers to get relief through the program.
via Fannie and Freddie to allow principal reductions – latimes.com.