Nomination of Mel Watt to FHFA is welcome news

We applaud President Obama’s nomination of Rep. Mel Watt (D-NC) as the director of the Federal Housing Finance Agency (FHFA). Rep. Watt is a candidate with strong qualifications in economic policy who understands the issues facing consumers in the financial marketplace. Rep. Watt has served in Congress for 20 years and is a prominent member of the House Financial Services Committee, where he has advocated for affordable housing, fair lending, and consumer protections. In 2009, he co-sponsored the Credit CARD Act that enacted important protections for credit card borrowers.  

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.