Fannie Mae and Freddie Mac agree to help some troubled homeowners cut mortgage principals

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Officials with Fannie Mae and Freddie Mac have announced the agency will participate in programs that allow homeowners in trouble to have mortgage principals reduced.

That news comes after demonstrations in Southern California and elsewhere in the country yesterday.

About 100 demonstrators marched from Pasadena’s City Hall to the local offices of Fannie Mae and Freddie Mac to protest home foreclosures.

Protestors brought mops and brooms and started sweeping the lobby, saying they say they want to clean house at Fannie Mae and Freddie Mac.

They were calling on the agency to work with homeowners trying to get loan modifications and principal reductions. Demonstrator Peggy Mears said too often homeowners just get another version of the old runaround. She says when homeowners call Fannie Mae or Freddie Mac to talk about their loan, "They tell you ‘we can’t help you. You have to go to the servicer, the bank.'" But she said, "When you go to the bank they say 'We can’t help you, the investor doesn’t want you to have a loan modification.' ....and the bank sends you back to Fannie Mae and Freddie Mac."

The protestors called for a moratorium on foreclosures. And they want Fannie Mae and Freddie Mac to stop selling foreclosed homes to outside investors.

“They’re buying up people’s miseries," said Mears. "They’re buying up people’s memories." She said the housing agencies should sell foreclosed homes back to the homeowner or a non-profit group, "so they can make these into affordable housing.”

Officials at the Fannie Mae/Freddie Mac office in Pasadena didn’t come down to meet with the demonstrators. And officials there declined to comment to the press. Officials at the national office in Washington didn't respond to requests for comment.

Fannie Mae and Freddie Mac later announced they will begin participating in programs that cut the mortgages for homeowners in trouble. In the Golden State the program is called Keep Your Home California. It is part of the federal government's Hardest Hit Fund, initiated after the Wall Street bailout.