safe banking

a blog on banking, corporate governance, and financial market reform.

December 13, 2014

New Policy Goes Only Partway in Helping Struggling Homeowners

In DealBook this week, I wrote about how the the Federal Housing Finance Agency has directed Fannie and Freddie to allow people who have lost their homes to buy them back from the enterprises at fair market value.

Prior to this directive, former owners had to pay off the full principal balance on their loan, which for underwater homeowners often was significantly more than fair market value.  This policy change is a good start, however it does not go far enough. It  does not prevent families from losing their homes to foreclosure in the first place. What should be done? Read more.

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In the wake of the financial meltdown in 2008, there were many who claimed it had been inevitable, that “no one saw it coming,” and that subprime borrowers were to blame.