FHFA’s Watt Says Debt Cuts Possible for Underwater Homeowners

Fannie Mae and Freddie Mac’s overseer wants to allow debt cuts for a narrow group of borrowers who owe more than their homes are worth. The trick is figuring out a way to do it without incurring costs for taxpayers.

Federal Housing Finance Agency Director Melvin L. Watt told reporters Wednesday that he is still studying the idea of reducing principal on properties with depressed values, a step backed by housing advocates and Democratic lawmakers.