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A key reason so few homeowners have had their principal reduced is that Fannie Mae and Freddie Mac, which own roughly half of all U.S. mortgages, have not been cutting principal for borrowers at risk of foreclosure. Edward DeMarco, the federal regulator for Fannie Mae and Freddie Mac, has opposed offering principal reductions, despite pressure from lawmakers. On Tuesday, DeMarco, the acting director of the Federal Housing Finance Agency, slightly softened that stance, saying his agency would consider the idea. Leigh said a greater response by the government would boost U.S. economic growth and help halt the decline in home prices. The IMF's assessment of U.S. mortgage foreclosure policy was part of the agency's report on the impact of household debt on the global economy. The global lending organization concluded that recessions tend to be more severe and prolonged if they are preceded by large increases in household debt, which is what happened ahead of the Great Recession.
[Associated
Press;
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