An interesting story was published last week by NPR and ProPublica regarding Fannie Mae and Freddie Mac. As many people know, a handful of banks agreed to carry out mortgage principle reductions for those who owe more than their homes are worth. Yet Fannie Mae and Freddie Mac have refused to do the same citing that it is not in the companies’ best interests to do so. Keep in mind that it was taxpayers who bailed out Fannie Mae and Freddie Mac with a whopping $150 billion! The most recent analyses that were done regarding the issue showed that, “the companies would take a loss upfront, but over the long run these mortgage modifications would save the companies money because they would lead to lower default rates.” Often when there is no good rational explanation, I assume that it’s because of politics that Fannie Mae and Freddie Mac are refusing to do what is obviously the correct thing. I hope I’m wrong and I hope they change their mind and soon. To see the full article, go here.