Thirty Democratic senators are urging the Federal Housing Finance Agency (FHFA) to evaluate the use of principal reduction as a “targeted solution” for assisting underwater borrowers with Fannie Mae and Freddie Mac loans.

In a letter to the GSE regulator, the senators note that FHFA provided Congress with an analysis that looked at applying principal reductions to all three million Fannie and Freddie borrowers that are underwater and owe more on their mortgage than the value of the property.

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