To catch you up, Cummings and Tierney caught someone hiding some important docs.

May 1, 2012

Dear Ranking Member Cummings and Representative Tierney:

Having just received a copy of your letter regarding principal forgiveness, I wish to convey my
disappointment with this letter, the failure to contact FHFA to address your concerns, and the
release of selective elements of the proprietary and confidential materials you received. The
agency’s letter of April 12, 2012, provided the documents responsive to your request.
Additionally, we offered to continue our dialogue with both of you.

I strongly disagree with any characterization of FHFA’s work or motives as anything but in
keeping with the professionalism expected of this agency. FHFA has endeavored to provide
responses to your requests relating to principal forgiveness pilot programs in a timely fashion. In
order to fully inform the public record, I am releasing the agency’s April 12, 2012, letter
including the summary of the pilot programs that was attached. Throughout FHFA’s
communications with you and the Committee, we have focused on getting to the facts and the
supporting information and analytics in what is a most important matter for homeowners and
taxpayers.

I would note that since 2009 FHFA has approved multiple pilot programs to look into the various
alternatives to principal forgiveness. These occurred even before the Treasury Department
instituted its HAMP Principal Reduction Alternative. These approvals certainly do not reflect
any pre-determined view on my part.

The documents from Fannie Mae and Freddie Mac (the Enterprises) provided to you reflect an
open and robust interest in this topic, enthusiasm for meeting the goals of finding a workable
approach for a pilot program and adherence to review of ideas from all sides, including gathering
data and undertaking its analysis. In sum, as noted in the agency’s transmittal letter, while
principal forgiveness pilots were developed, at the end of the day there was not full agreement to
proceed at the Enterprises or their counterparties. Further, pilot programs themselves are
experimental and go through discussion and review prior to deployment and once deployed must
be reviewed prior to any full implementation of a broad program. At the corporate level, taking
into account staff perspectives and experience, the pilots were not pursued or were terminated.
As noted in our letter to you and your letter to me, operational concerns were a key determining
factor in not pursuing or ending the pilot programs.

The fact that FHFA continues to consider principal forgiveness alternatives, including recent
HAMP program changes initiated by the Treasury Department, belies any ideological tilt on our
part, but rather a strict analytical-based approach to gathering and evaluating data to determine
what options best fit within the legal constraints that fall upon this agency as conservator for the
Enterprises. FHFA continues its analysis and continues its discussions with the Treasury
Department.

I believe we agree on two important points: FHFA has a duty to ensure the Enterprises provide
assistance to troubled homeowners and FHFA has a duty to conserve the assets and property of
the Enterprises so as to protect taxpayers. How best to accomplish these separate goals,
especially in light of the uncertainties associated with initiating a principal forgiveness program,
is a challenging policy question. Such a policy question, especially as it has to do with public
funds being taken from one group of citizens to provide a benefit to another group of citizens,
should be determined by Congress. In the absence of clear legislative direction, however, FHFA
will continue to make determinations in how best to accomplish both of these goals after careful
analysis of the facts and other information available to us and the multiple legal responsibilities
placed upon us.

Yours truly,
Edward J. DeMarco
Acting Director

[ipaper docId=92031622 access_key=key-175f7a1jbc6ay5mw1pqh height=600 width=600 /]

source: http://www.fhfa.gov

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