Washington DC– Oregon’s Senator Jeff Merkley issued the following statement after the release of new analysis by the Federal Housing Finance Agency (FHFA) that principal write-downs for homeowners could save billions of dollars for Fannie Mae and Freddie Mac.
“Today’s analysis is a step in the right direction. When it makes sense, principal reduction can both save money for Fannie Mae and Freddie Mac and help struggling homeowners who are underwater.
“However, with millions of homeowners facing foreclosure, principal reduction for less than a million homeowners is no silver bullet. We moved mountains saving the major financial institutions in 2008 and 2009. It’s now time to bring the same energy and conviction to restore health to our housing market and help families stay in their homes.”
Merkley has previously pushed FHFA Acting Director Edward DeMarco to add principal write-downs to the tools available for confronting the foreclosure crisis. After pointedly challenging DeMarco to explain why FHFA was barring Fannie and Freddie from considering reductions in principal as one option in February, Merkley joined with colleagues to call on DeMarco to provide Congress with an accurate analysis of the effects on taxpayers of using principal forgiveness versus other mortgage modification options such as principal forbearance for loans backed by Fannie Mae and Freddie Mac.