The Obama administration plans to ratchet up pressure on mortgage lenders to write down principal for borrowers who are underwater on their homes according to Dow Jones.
”In my view we need to push hard on the industry. Servicers and investors have got to begin writing down principal,” said David Stevens, Federal Housing Administration Commissioner during an event organized by Women in Housing and Finance.
FHA released a short refinance program last month that allows underwater homeowners who are current on their loans to qualify for an FHA insured loan if lenders are willing to write off 10% of the unpaid principal balance of the first mortgage.
”We are concerned in the administration that this is probably the next critical element in getting the housing market stabilized–this issue around negative equity,” Stevens said.