Program could offer savings for homeowners and multiple community benefits for the city
MINNEAPOLIS (August 3, 2012) — Earlier today the Minneapolis City Council approved an amendment to its fiscal year 2013 Federal Agenda, calling on the Federal Housing Finance Agency (FHFA) to establish a principal reduction program for Fannie Mae and Freddie Mac owned or insured rental mortgages.
Minneapolis Councilmember Elizabeth Glidden advocated for the recommendation. “Principal reduction would help families stay in their homes, reduce neighborhood blight and save tens of thousands of dollars of expense that occurs when a foreclosure is final,” Glidden said. “Principal reduction is a common sense solution to reducing foreclosures, which continues to devastate families and neighborhoods in Minneapolis.”
“Too many hard-working families continue to lose their homes to unnecessary foreclosures, which harm our communities and prevent the economy from recovering,” said Javier Morillo-Alicea, Presdent of SEIU Local 26. “By going on record urging Fannie Mae and Freddie Mac to use principal reduction, the city of Minneapolis is taking an important step towards ending the foreclosure crisis.”
ISAIAH and its partners have worked with city officials in both Minneapolis and Saint Paul to bring about solutions to the ongoing foreclosure crisis. Kate Hess Pace, an organizer with ISAIAH, applauded today’s vote. “We are very pleased by the actions of the Minneapolis City Council,” Hess Pace said. “The devastation caused by this crisis requires action at every level, from national principal reduction to local foreclosure mediation.”
According to the amendment approved today, “Fannie Mae and Freddie Mac own or insure approximately 60% of the nation’s residential mortgages. As a result of the foreclosure crisis, the two agencies and private mortgage firms have been urged by housing advocates and governments to develop policies to assist homeowners to remain in their homes. Among the policies have been mortgage modification programs that include lower monthly payments, forbearance, principal reduction, shared equity and a combination of the programs. A recent court settlement involving mortgage lenders, the states and the federal government will provide refinancing and form of principal reduction to homeowners whose homes are “underwater” – mortgage value exceeds home value. The principal reduction program is available to loans serviced by banks but loans backed by Fannie Mae and Freddie Mac are not eligible for the program.”
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