What started as a dry, lame-duck session hearing on the Federal Housing Finance Agency in the Senate Banking Committee on Wednesday, got heated when U.S. Sen. Elizabeth Warren, D-Mass., went guns blazing after the FHFA director.
Warren, an outspoken progressive and a likely candidate for the 2016 Democrat presidential nomination, went on the attack during FHFA Director Melvin Watt’s first hearing before the committee, saying that he’s never done anything to help homeowners who are underwater and facing foreclosure.
“Five million families lost their homes during the financial crisis and millions more are still struggling,” Warren said, prefacing her questions to Watt. “According to the latest data from CoreLogic…another 5.3 million homeowners remain underwater on their homes. And people are continuing to lose their homes every day in foreclosure.
“We talk a little bit about the law here, now one of your duties under the law. One of your duties is to conserve the assets of Fannie and Freddie, but another duty given equal importance by Congress … is to implement a plan that seeks to maximize assistance for homeowners and take advantage of available programs to minimize foreclosures,” Warren said.
“The Treasury Department has found that principal reductions could save Fannie and Freddie nearly $4 billion and help half a million homeowners stay in their home,” Warren said. “It has been six years since Congress created FHFA and in all that time your agency has never, not once permitted a family to reduce its principal mortgage through Fannie or Freddie.”
A clearly frustrated Warren continued.
“I’ve asked about this repeatedly and you’ve said you’d look into allowing Fannie and Freddie to engage in principal reduction; you said it again today,” Warren said. “You’ve been in office for nearly a year now and you haven’t helped a single family, not even one, by agreeing to a principal reduction. So I want to know why this hasn’t been a priority for you. The data are there.”
Watt appeared a little shaken by the line of attack.
“It’s probably an overstatement to say it’s not been a priority,” Watt stammered. “It’s just a very difficult issue. …”
Warren cut him off.
“Chairman Watt, you have had a year to do that, you have known for five years before that what the problem was, we have two studies coming out showing that Fannie and Freddie could make money by doing this,” she said.
Watt stammered in response.
“We are going to have an answer sooner – it won’t be as long as it has been…” he said.
Warren interjected, “How many more people have to lose their homes before we get there?”
Watt said that he couldn’t or wouldn’t take responsibility for what happened in the five years before he assumed the director’s chair at FHFA.
“But you’ve been there a year,” Warren interrupted.
Warren again interjected.
“Indeed, how many families has it affected?” she demanded.
“It has affected a number of—”
Warren cut him off.
“This is not a program producing money for Fannie and Freddie but it is causing a lot of pain for families who were already victims,” she said.