Washington, D.C. — Today, Julia Gordon, Director of Housing Finance and Policy at the Center for American Progress, released the following statement reacting to a speech delivered by Federal Housing Finance Agency, or FHFA, Director Mel Watt in which he outlined his approach to the agency’s conservatorship of Fannie Mae and Freddie Mac:
Director Watt’s speech today demonstrated a thoughtful approach to the interrelationship among many complicated issues. In a measured and deliberate way, he effectively balanced a multitude of competing considerations in a way that will satisfy many stakeholders.
FHFA leadership should be commended for refocusing the agency on Fannie and Freddie’s core mission, which is to provide broad access to affordable credit. Today’s announcement reflects a responsible approach to expanding opportunity for sustainable homeownership while also protecting taxpayers and enhancing the operation of the agency bond market.
We welcome the opportunity to provide input on the agency’s pricing strategy. We also hope the agency will use its upcoming rulemakings on the 2015 housing goals and duty to serve to encourage Fannie and Freddie to provide further opportunities to creditworthy borrowers in underserved markets.
In the coming months, we encourage Director Watt to address two additional issues that are exceedingly important to America’s families. First, FHFA should allow Fannie and Freddie to provide struggling borrowers with principal reduction, an approach that has been shown to result in highly sustainable loan modifications. Second, the agency should permit those companies to fund the National Housing Trust Fund and Capital Magnet Fund, which support affordable rental housing for those at the bottom of the economic ladder.
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