Homeowner Bailout May Be on the Way

Insiders think Fannie and Freddie will forgive mortgage debt
By John Johnson,  Newser Staff
Posted Aug 5, 2010 2:44 PM CDT
A file photo of a foreclosed home.   (AP Photo/David Zalubowski, file)

(Newser) – Another enormous bailout may be in the works, this time for underwater homeowners, writes Reuters blogger James Pethokoukis. Rumor has it that the Obama administration will sidestep Congress and order lenders Fannie and Freddie to forgive some of the mortgage debt of Americans who owe more than their homes are worth. He offers no sources but says Wall Street banks are quietly alerting clients to the possibility.

"The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses," writes Pethokoukis. "The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie."

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