Fannie and Freddie May Be Splitting

Fannie, Freddie in talks w/White House/Treasury on new mortgage principle reduction plan – The White House wants both Fannie and Freddie to join a program being run by the FHA that allows banks and other creditors to essentially hand off loans to the FHA following a principle reduction. Participation by Fannie and Freddie would place additional pressure on banks to also join in w/reducing principle on underwater mortgages. Fannie and Freddie relinquish rights in the event of a principle write-down (inc. the ability to collect mortgage insurance or put-back the paper to its originating bank). WSJ http://on.wsj.com/i6mFzH