At a Senate Banking Committee hearing yesterday, Elizabeth Warren (D-MA) pulled no punches when questioning Mel Watt, the new head of the Federal Housing Financing Agency.
Sen. Warren asked why the FHFA hadn’t yet implemented principal reduction relief for millions of struggling homeowners even though it would be mutually beneficial.
“Principal reduction is often a win-win, that helps both Fannie [Mae] and Freddie [Mac], and helps the family … A 2013 [Congressional Budget Office] study found that even a modest principal reduction plan could help 1.2 million underwater homeowners, prevent 43,000 defaults, and save Fannie and Freddie 2.8 billion dollars…”
The senator continued,
“It has been six years since Congress created FHFA, and in all that time your agency has never, not once, permitted a family to reduce its principal … You’ve been in office nearly a year now, and you haven’t helped a single family… So I want to know why this has not been a priority for you? That data are there!”
Watch Watt unsuccessfully attempt to answer Sen. Warren’s questions.