New homes from M/I Homes are being sold.

An eery reminder of the magnitude of destruction and lasting distress of the Great Recession and its housing depression, housing finance giants Fannie Mae and Freddie Mac plan a mortgage principal-forgiveness program for borrowers still at risk of losing their homes due to failure in making payments.

Wall Street Journal staffer Joe Light reports on the measure, which has Federal Housing Administration backing, and, Light notes, may impact as many as 50,000 of the over 4 million home mortgage borrowers still "underwater" on their home loans. Light writes:

Fannie and Freddie—which don’t make mortgages but rather buy them from lenders and wrap them into guaranteed securities—would also forgive principal only in cases where they determine the companies would lose less money with that option than foreclosure or other foreclosure-prevention methods. In addition, the new program will likely be limited to mortgages whose outstanding principal balance is under a certain dollar amount, people familiar with the matter said.

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