Melvin L. Watt, the director of the Federal Housing Finance Agency, is nearing a decision over whether to allow struggling home borrowers in the U.S. to reduce their mortgage balances, an issue that has dogged the regulator since the end of the housing crisis.
An announcement from the FHFA, which oversees mortgage giants Fannie Mae and Freddie Mac, is expected to come in the next 30 days, Watt said in prepared remarks at an event in Washington on Tuesday. Any policy will require a “win-win” strategy for eligible borrowers and for the taxpayer-backed enterprises, he said, noting that it’s still possible they take the option “off the table entirely.”
Watt, who was appointed to the FHFA by President Barack Obama at the behest of borrower and affordable-housing advocates, has been enmeshed in the same debate that followed his predecessor, Edward J. DeMarco. DeMarco resisted the idea of debt reductions on grounds that they would cost taxpayers. Protesters in 2012 went as far as showing up on the lawn of DeMarco’s house in suburban Maryland and urged the president to replace him.
Since taking office in 2014, Watt has endured similar protests, by advocates who say he hasn’t moved quick enough to help more struggling borrowers. Watt has repeatedly said that in coming to any decision, there must be a balance between helping borrowers in a way that won’t cost Fannie Mae and Freddie Mac.