Political pressure backed with money can be very persuasive in Washington and it may provide relief for some underwater borrowers with Fannie Mae and Freddie Mac loans.

For several months the Federal Housing Finance Agency (FHFA) has been under constant pressure from the Obama administration and Democratic lawmakers to allow the GSEs to offer a principal reduction program. Such an effort would allow servicers to write down a portion of the principal, giving borrowers more of an incentive to stay in their homes.

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