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FHFA Principal Forgiveness Wouldn’t Directly Affect Credit Unions: CUNA Execs

Possible Fannie Mae, Freddie Mac write-downs could in fact help credit unions by forcing losses onto holders of first liens.

By Heather Anderson | Updated on April 11, 2012

If the Federal Housing Finance Agency launches a mortgage principal forgiveness program, only loans that have been sold to Fannie Mae and Freddie Mac would qualify, so it wouldn’t have a direct effect on credit union balance sheets, CUNA Executive Vice President and General Counsel Eric Richard told Credit Union Times.

In fact, such a program might even benefit institutions like credit unions that hold second liens, because principal forgiveness “would force the losses down the throats of the holder of the first,” Richard said.

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