Aggressive, Creative Housing Recovery

By Stevie Duffin Updated on 12/14/2012

By Daniel Duffield

In a recent statement regarding the housing crisis, Treasury Secretary Timothy F. Geithner stated that several years of “aggressive, creative” initiatives will be necessary for the U.S. to recover from its devastating housing crisis.

"We’re going to keep at this as long as necessary,” Geithner remarked today at a Los Angeles event. “We think there’s a very good case for people deeply under water, experiencing hardship, to modify their mortgages by reducing principal.”
According to the regulator for Fannie Mae and Freddie Mac, the GSE will not pardon owed principal on delinquent mortgages that they guarantee.

Speaking with reporters today, Edward J. DeMarco, the current director of the Federal Housing Finance Agency, stated that data indicated no obvious benefits to taxpayers in the event of the FHFA changing its policy to allow loan modifications that include debt writedowns.

In response, Geithner criticized the decision, stating, “I do not believe it is the best decision for the country. The use of targeted principal reductions by the GSEs would provide much-needed help to a significant number of troubled homeowners.”

After meeting with German Finance Minister Wolfgang Schaeuble and European Central Bank President Mario Draghi, Geithner also commented that Europe is “absolutely committed to doing what’s necessary” in its efforts to settle its deepening debt crisis.

“This is completely within their financial ability to solve,” Geithner said, adding “the politics of doing this are very hard.”