WASHINGTON, July 31 (Reuters) - The top U.S. housing regulator rebuffed the offer of taxpayer funds to reduce mortgages held by struggling homeowners on Tuesday, a blow to the Obama administration which is keen to show voters it can help fix the housing market.
Calling it a challenging decision, the regulator for Fannie Mae and Freddie Mac said using funds from the Troubled Asset Relief Program would not make a meaningful improvement in reducing foreclosures in a cost-effective way for taxpayers.
“The anticipated benefits do not outweigh the costs and risks,” the Federal Housing Finance Agency’s head Edward DeMarco told reporters.
The administration has been pressuring DeMarco to allow the government-controlled mortgage financers to do more principal writedowns. But DeMarco has maintained that this would needlessly drive up the costs of their taxpayer bailout, which has already reached more than $150 billion.
Treasury Secretary Timothy Geithner told DeMarco in a letter released to media he was concerned about the regulator’s continued opposition and urged the acting director to reconsider his decision.