Fannie Mae and Freddie Mac are being pressured to participate in a federal short-refinance program.

The program requires lenders to reduce the principal on a mortgage loan before refinancing that loan into a Federal Housing Administration product. The aim is provide help to borrowers who are current on their mortgage payments but owe more than their homes are worth.

Would Fannie and Freddie's participation help stabilize the San Gabriel Valley's struggling housing market?

"I think anything that anyone will do to give away more money will help people ... but the underlying question is how are you going to pay for it?" said Tom Adams, owner of Century 21 Adams & Barnes. "Fannie and Freddie can't write down principal balances unless someone gives them the money. And it can only come from the federal government."

The Obama administration just created a commission to seek solutions to the nation's long-term debt crisis, Adams, said, and the Fannie/Freddie proposal would just create more debt.

Fannie and Freddie own or guarantee about half of the nation's first-lien mortgages, and the agencies have been reluctant to lower loan balances, particularly when a homeowner is still making their monthly mortgage payments.

Adams said foreclosures have slowed dramatically in the San Gabriel Valley.

"It's slowed incredibly compared to last year," he said. "The number of foreclosures has fallen because banks are not releasing

The volume that said they would, and because more and more of those homes are being picked up at trustee sales by investors."

Marty Rodriguez, who owns a realty office in Glendora, said struggling first-time buyers who have not refinanced before or taken out a second, should have access to programs that can reduce their principal.

But there are others, she said, who shouldn't be extended that same opportunity.

"If you have refinanced before, this would be like stealing," she said. "It's like legalized theft, because when people refinance, they are taking cash out."

Rodriguez cited a couple who have a home in Upland as an example. They took out a second for $125,000 and bought a boat - and yet they haven't made any mortgage payments for months.

Giving them a reduction in their principal wouldn't be right, she said.

Borrowers who tap into the short-refinance program must meet standard underwriting guidelines, with a minimum credit score of 500 and the ability to support their current loan payments.

Steven Johnson, who heads the Southern California region of Metrostudy, a real estate information and consulting firm, supports a bill proposed over the summer that would provide for affordable refinancing of all loans held by Fannie and Freddie.

"That would move about $58 billion into the wallets and purses of Americans," he said. "And then they'd go out and spend more money."