Warren blasts FHFA chief

by Rachel.Norvell19 Nov 2014

During this morning’s Senate Banking Committee hearing, U.S. Sen. Elizabeth Warren (D-Mass.) made her opinion known that she believes Federal Housing Finance Agency Director Mel Watt is moving too slow on mortgage reform.


She bluntly asked Watt during the today’s hearing why he has not acted on a plan to help struggling homeowners lower the amount they owe on mortgages. Warren then cited studies she said showed reductions in loan principal could financially help borrowers and mortgage giants Fannie Mae and Freddie Mac.


"I’ve asked about this repeatedly and you said you’d look into allowing Fannie and Freddie to engage in principal reduction, you said it again today,” Warren said at a Senate Banking Committee hearing. She and Democratic Senator Robert Menendez pressed Watt on why the FHFA has yet to reach a decision on principal loan reduction for struggling homeowners.


She claimed that Watt hasn’t done anything to help homeowners who are underwater and facing foreclosure since he has been in office. “You’ve been in office for nearly a year now and you haven’t helped a single family, not even one, by agreeing to a principal reduction,” she continued. “I want to know why this has not been a priority for you."


“Five million families lost their homes during the financial crisis and millions more are still struggling and another 5.3 million homeowners remain underwater on their homes.,” she added, citing data from CoreLogic. “People are continuing to lose their homes every day in foreclosure.”


Watt replied, telling Warren that she was overstating his lack of attention to the policy calling it “a very difficult issue.” “The reason it is difficult is because we are looking for exactly what you said – a win-win situation,” he said. “We have to do this in a way that is responsible, otherwise we just reduce principal for everybody across the board…is not what anybody I think is advocating for, so then we have to decide what is a responsible way to do so.”


Watt added that he does not necessarily believe that having higher G-fees is the most part of bringing private capital back into the market. He added that he is more focused on providing certainty, and setting out a "transparent and rational basis" for setting G-fees. “This issue cannot be elevated over other matters that the FHFA is examining without a thorough analysis.”


  • by | 11/19/2014 2:25:49 PM

    how do I get my principal mortgage reduction?

  • by where does it end | 11/19/2014 2:31:24 PM

    Wouldn't it be nice if we could all just get a reduction in the amount of money we owe? Why stop at FNMA and FHLMC, why not just give every homeowner in the United States a reduction on their principal balance? Wait, why don't we give everyone a house??? Or better yet, why don't we get rid of Elizabeth Warren and her 1/4, no wait, 1/8, no wait, 1/24th native American ideas...

  • by Ken A | 11/19/2014 2:32:04 PM

    Typical Democrat, why isn't the government giving away money to people to help them out of a jam. Gee, I lost money on some stocks recently, can I get that money too. My new truck I bought in 2012 is worth less than what I paid, can I get a government handout for that difference. To pay for it, lets tax all of the people that bought houses at the bottom of the market and now are sitting on equity, that will fix it! God forbid that nothing bad ever happens to anyone in the good old USA. Just where do the Democrats find these whack jobs. Oh that's right Harvard university, same place the Democrats president comes from. Sorry Dems, but not every dime a citizen spends works out and I'll bet major bucks that most of those upside down refinanced and stripped out equity and that is why they are upside down. Come on Republicans, kill the CFPB and let the industry get back to making mortgages to people that can afford it.


Should CFPB have more supervision over credit agencies?