More lenders offer plans with debt forgiveness
Non-government holders of delinquent mortgages are offering more payment plans with debt forgiveness, even as government-controlled Fannie Mae and Freddie Mac resist, said the U.S. Office of the Comptroller of the Currency.
Of the 116,153 mortgages modified in the fourth quarter of 2011, debt forgiveness was included in 16 percent of loans held by private investors, 25 percent of loans held in bank portfolios and in none owned by the government-run companies.
"Principal modifications can be a tool in the overall arsenal," Bruce Krueger, a senior mortgage expert with the Comptroller's office, said Wednesday.
Fannie Mae and Freddie Mac, the mortgage financiers under government conservancy, haven't granted principal reductions because it would cost the taxpayer-funded companies almost $100 billion, Edward DeMarco, acting director of the Federal Housing Finance Agency, said in January.
In contrast, private investors or banks may have acquired the mortgages at a discount or been forced to write down the value of the loans by regulators, making it easier for them to offer debt forgiveness, Krueger said.