Let me say up front that I believe, based on all the analysis I have read, that principal reductions would be long-run positive over foreclosures in cases where the borrower has an ability to pay. But that's not quite the issue here. The issue is that NPR and Pro Publica are claiming that some secret analysis exists where even Fannie and Freddie believe this. That puts the onus squarely on Ed DeMarco, and makes him more of a villain holding back the housing rebound.

Lawler takes issue with one part of the NPR/Pro Publica story, the part which claims that "loan forgiveness wouldn't just help hundreds of thousands of families (stay) in their homes," but that also "it would help taxpayers" by saving Freddie and Fannie money. That's not true, Lawler says, because the only way principal reductions end up saving Freddie and Fannie money is through the recently super-sized HAMP incentives for principal reductions going to them. And of course, those incentive payments, routed through TARP, come from taxpayers.

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