Yesterday, the Minneapolis, Minnesota City Council approved an amendment to its fiscal year 2013 Federal Agenda, calling on the Federal Housing Finance Agency (FHFA) to establish a principal reduction program for Fannie Mae and Freddie Mac owned or insured rental mortgages.

When Ed DeMarco rejected participation for Fannie Mae and Freddie Mac in the HAMP principal reduction program, condemnation on the left was fast and furious. But the statute is a bit unclear, and no matter, what Ed Marco may be a convenient villain for an Administration that has done little to solve the housing problem over three years.

I was wondering whether FHFA Acting Director Ed DeMarco would respond to that Wall Street Journal article today pressuring him to allow participation from Fannie Mae and Freddie Mac in an Administration principal reduction program. Well, he has. DeMarco rejected participation for Fannie and Freddie, opting to go ahead with principal forbearance and other loan modification programs and blocking principal reduction.

FHFA leader Ed DeMarco has indefinitely put on hold the question of whether he will allow Fannie Mae and Freddie Mac to offer principal reductions to delinquent underwater borrowers. He’s actually said nothing about it publicly since April. But Nick Timiraos leaks out the details of a new study that shows the benefits of principal reductions are greater than FHFA first surmised.

The House Oversight and Government Reform Committee, Darrell Issa’s perch, has released a new report on the practice of now-defunct mortgage lender Countrywide handing out special mortgages at low rates to members of Congress and other key officials through their “VIP” program. And it does not appear to pick sides or divvy up the information to protect one party or the other.

A ruling in a long-awaited foreclosure case in Massachusetts had an ambiguous result.

Good columnists like Edward Luce are explaining some of the basics of the ongoing housing/mortgage crisis, but they’re still assuming that the decisions open to Ed DeMarco will have a greater effect than is being discussed. That’s because his decisions about principal write downs would apply only to a small part of the overall depressed housing market.

I’ve noted before that one of the reasons we don’t get good housing policy in this country is that the media by and large doesn’t understand it. When Ed Henry shows that he doesn’t know how home loans work, it means more complex issues about housing policy have no chance of moving past the demagoguery stage. That’s what I thought when I saw this story from ABC News about how taxpayers are paying for mowing lawns! Oh noes!

Coverage of Ed DeMarco’s speech on principal reductions has sometimes missed the point he’s talking about applying reductions to only a small subset of the underwater mortgates held by the GSEs, so the benefits of the policy are also seen as relatively small. It seems he and the Administration are focused more on interest refinancing than principal reductions.

Ed DeMarco, the Acting Director of the Federal Housing Finance Agency for the past three years, will deliver a speech today at the Brookings Institution that leans in the direction of allowing principal reduction on Fannie and Freddie-backed loans in certain cases. This is definitely a crack in the otherwise rigid objection to principal reduction on these loans, but his preliminary analysis suggests the idea may not produce that great an effect.