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According to the Wall Street Journal, the United States government is working with Fannie Mae and Freddie Mac to reduce the mortgage balances for the borrowers whose homes are worth less than they borrowed. However, Fannie Mae and Freddie Mac are highly reluctant to go through with this plan especially with the borrowers who are still making mortgage payments. Furthermore, the government also wants both companies to join another program run by the Federal Housing Administration (FHA) to further assist struggling borrowers
During the housing bubble, property values were sharply increasing, and so the owners were able to borrow additional money against their homes. But, after the bubble burst, the borrowers found themselves in debt, and living in a home that was worth a lot less than the money they owed. This is why the government would like to restructure the debts, and assist the homeowners who already have not lost their homes to foreclosure.
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