Nadler urges DeMarco to consider principal reductions

“After so many homeowners have been taken advantage of and afforded little opportunity to extricate themselves from financial ruin, it is critical to provide the justice and relief that we can.”

Nadler suggested that DeMarco must do “everything within his power to provide that justice.”

During a hearing Tuesday before the Senate Banking Committee, DeMarco remained firm in his stance that reducing the principal of some loans could cost taxpayers more money than forbearance and other avenues taken to avert foreclosure. 

Meanwhile, Housing and Urban Development Secretary Shaun Donovan reiterated, at the same hearing, that reducing loan balances for those who are underwater on their mortgages but current on their payments could not only help homeowners but provide a much-needed boost to the housing market recovery. 

State attorneys general, who worked with federal officials to broker a $25 billion settlement with several of the nation’s largest banks over foreclosure abuses, have suggested that the deal will spur mortgage principal reductions.

Iowa Attorney General Tom Miller (D) said he expects the states’ settlement with the banks “will make widespread principal reduction throughout the country commonplace.”