When acting GSE regulator Ed DeMarco last week slammed the door on the idea of Fannie Mae and Freddie agreeing to principal writedowns on underwater mortgages he was predictably cheered by the GOP and lambasted by Democrats who once again called for his head.

But DeMarco also has received the quiet support of mortgage servicers and their advisors who fear that allowing principal writedowns on government backed-loans would open a Pandora’s Box of sorts that could affect the mortgage industry for years.

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