A replacement for Ed DeMarco, the current acting director of the FHFA, is long overdue. DeMarco has obstructed necessary policy changes that would have lessened the negative impact of the foreclosure crisis on families and communities alike. Specifically, he has barred Fannie Mae and Freddie Mac from allowing lenders to reduce principal on underwater loans, even in situations where it would prevent foreclosure. Negative equity is associated with higher likelihood of mortgage defaults. In a market where one in four mortgage holders is underwater, allowing principal reductions on Fannie- and Freddie-backed loans would keep more families in their homes and stabilize communities and the market alike.

Woodstock Institute for years has called for principal reductions to be allowed on Fannie and Freddie loans, and for a replacement for DeMarco when he continued to refuse to change FHFA policy even when principal reductions were demonstrated to save money for his agency. We believe Rep. Watt would enact more forward-looking policies on principal reduction as FHFA director.

The Senate should support the nomination of Rep. Watt based on his deep experience working on financial issues and commitment to protecting consumers. Please contact your  Senators and ask them to confirm Rep. Watt.