The Wall Street Journal today reported that the GSEs are being pressured to participate in the Administration’s FHA principal-reduction program.  This has significant impact for big servicers, Fannie and Freddie – not just with regard to heightened losses, as the Journal rightly notes, but also as a precursor to what can happen to the GSEs in the Administration’s January reform proposal. The more the Administration mandates policy-focused action, the more the GSEs look like Ginnie and the harder it is to turn them into something else.

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