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It is hard for any mortgage-modification program to respond to significantly underwater homes. This would require that principal balances of millions of mortgages be substan.- ti ally reduced at a cost of billions of dollars. This is unlikely to happen despite a new administration program to encourage this. In fact, there is no politically feasible way to help the vast majority of those who are unemployed or who have underwater homes to avoid foreclosure. h moo as ooi�V moo moo as as ooi�V 11'ute: tl�hei Capi�ital Efforts in these areas are at an early stage, and it is too early to predict what the final outcome will be. The result, however, will have a fundamental impact on housing mar.- kets for years to come. The cost and availability of debt will affect the ability of millions to buy homes or to afford to rent in new buildings, most especially members of genera.- ti on Y, who normally would be forming their first households in the years ahead. The Future of �Faininie Mae aind �Freddie Mac Fannie Mae and Freddie Mac have been in federal conservatorship since summer 2008. They own or guarantee half of the nation's $11 trillion in home mortgages and together with the Federal Housing Administration are responsible for backing nine mortgages in ten made today, far higher than the three in ten they backed historically. 6