Freddie and Fannie Won't Pay Down Your Mortgage

Pressure is mounting on loan servicers and investors to reduce troubled homeowners' loan balances...but the two largest owners of mortgages aren't getting the message.

Fannie Mae and Freddie Mac, which are controlled by the federal government, do not lower the principal on the loans they back, instead opting for interest rate reductions and term extensions when modifying loans.

But their stance is out of synch with the Obama administration, which is seeking to expand the use of principal writedowns. In late March, it announced servicers will be required to consider lowering balances in loan modifications.

Click to read: Freddie and Fannie won't pay down your mortgage...