ABA Statement on FHFA’s Principal Reduction Announcement

Aug 1 - The American Bankers Association has released the following statement by Bob Davis, ABA executive vice president of mortgage policy, on the Federal Housing Finance Agency’s principal reduction.

“We appreciate FHFA’s prudent and thoughtful approach that considered the full costs and benefits of principal reductions.  

“Assisting troubled borrowers and encouraging recovery in the housing market is extremely important, yet, there are more cost-effective and efficient options that carry fewer unintended consequences than principal reductions.

“As FHFA’s research illustrates, principal reductions do not measurably help troubled borrowers avoid foreclosure, yet increase the cost to taxpayers at a time when our nation’s fiscal situation is already strained.

“Our nation’s housing policy should first and foremost promote responsible, sustained homeownership, not incentivize borrowers to default on mortgages they are able to afford in search of taxpayer-funded assistance. 

“The industry is dedicated to assisting struggling borrowers, having already made more than 13 million modifications and solutions since 2007. We applaud FHFA’s progress on further streamlining the refinance process and efforts to expand refinancing to additional borrowers.”