Oversight Chairman Issa Statement on FHFA Decision Not to Implement Mortgage Principal Reduction

July 31, 2012

WASHINGTON – House Oversight and Government Reform Committee Chairman Darrell Issa today issued the following statement regarding Federal Housing Finance Agency Acting Director Edward DeMarco’s decision to reject a proposal advocated by Obama Administration officials to write-down the principal value of certain mortgages held by Fannie Mae and Freddie Mac:

“Today’s decision by Acting Director DeMarco protects taxpayers from picking up even more costs to bailout Fannie Mae and Freddie Mac’s bad financial bets.   Other policies, such as temporarily reducing payments have been shown to be much more effective and cost efficient than principal write-downs.  This now rejected spending proposal, which Obama Administration officials have touted, would not have made a meaningful improvement in reducing foreclosures in a cost effective way for taxpayers.  Acting Director DeMarco should be commended for maintaining organizational and regulatory independence and resisting efforts to politicize federal housing policy in an election year.

“The House Oversight and Government Reform Committee will continue its efforts to ensure that the Federal government meets its obligations to protect the rights of both homeowners and future homeowners while using taxpayer funds appropriately and effectively.”

A copy of a letter from Oversight Chairman Issa and TARP, Financial Services and Bailouts of Public and Private Programs Chairman McHenry is available here.