Apollo Financial Group Shows How Principal Forgiveness Can Work for Fannie Mae

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Distressed debt investment experts, Apollo Financial Group demonstrate how the Congressional Budget Office plan to cut home loan balances could work for Fannie Mae and Freddie Mac.

Distressed debt investment experts, Apollo Financial Group demonstrate how Congressional Budget Office plan to cut home loan balances could work for Fannie Mae and Freddie Mac.

Apollo has been purchasing, selling and modifying distressed mortgage debt, creating win-win solutions for parties on both sides of the issue, and generating attractive yields for investors, while helping to ease the current burden facing U.S. taxpayers.

New debates are being fueled by the May 2013 release of a new Congressional Budget Office (CBO) report supporting the Treasury Department’s push to force Fannie Mae and Freddie Mac to embrace principal forgiveness for home loan borrowers. The Federal Housing Finance Agency (FHFA) that regulates Fannie and Freddie has so far resisted the move, but this could change with President Obama’s nomination of Rep. Mel Watt as the new head of the agency.

Coverage of the debate on the Wall Street Journal blog on May 6th, 2013 highlights the FHFA stance, whom has repeatedly argued that principal reduction of mortgage balances does not justify the costs and promotes ‘moral hazard’; encouraging more borrowers to strategically default on their loans.

Backing up the Treasury’s proposed program, the CBO report identified significant government savings from allowing principal reduction on Fannie Mae and Freddie Mac loans. Depending on the exact execution of the initiative the report estimates the government could save almost $3 billion.

Government savings in the billions of dollars range could clearly provide significant potential relief for taxpayers as it trickles down and reduces the need to raise taxes further.

While the debates rage and decisions continue to be delayed New York based, Apollo Financial Group has already been proving that principal reduction can work for both note holder and borrower. As a substantial buyer of non-performing notes, Apollo makes it work as the note holder by working out favorable outcomes with homeowners to resolve the default. Spokesman for the Wall Street distressed debt investment, Dean Anastos says the company’s “proprietary model has proven extremely beneficial for all involved, while delivering superior returns to investors”.

In fact, homeowners enjoy double tax benefits from this form of resolution. Not only does the government avoid major losses that would need to be padded by increased taxes, but the individual borrowers involved dodge huge personal tax bills by accepting loan modifications with principal reductions prior to the expiration of the Mortgage Debt Forgiveness Act.

On the flip side Apollo also empowers investors to achieve attractive yields, fuel wealth building and help the wider economy by alleviating the burden on tax payers, by becoming distressed debt note buyers themselves and tapping into the channels and relationships the firm has developed. Some of the recent media coverage of the firm’s progress can be seen in this video.

Those interested in finding out more about how note buying works and how principal reductions can be profitable for note holders will find more information on Apollo Financial Group’s website http://apollofinancialgrp.com, where dates and locations of upcoming live educational events on the subject can also be found.

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Eric Peters
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