And the finance Agency Director mel watt. On the status of the Housing Finance system, fannie mae and freddie mac have been in conservatorship for close to 9 years. In september of 2008, hank paulson famously described the conservatorships as a timeout. Fannie and freddie along with fha continue to dominate the Mortgage Market. 70 of the mortgages are backed by the federal government. Fannie and freddie currently earning profits at the Housing Market experiences a downturn, taxpayers could be on the hook for billions of dollars. The status quo is not a viable option. The Housing Finance system dependent on two governmentsponsored enterprises and perpetual conservatorship is not a sustainable solution. Taxpayers today bear too much risk and the government plays too bigger role in the Mortgage Market. A number of groups release proposals for reform in recent months including the mba, i cba, milliken institute, several coauthors writing jointly for the urban institute and many others. The committee is considering all these proposals as well as other ideas about what the future system should look like. In the meantime f hfa continues to serve as conservator and regulator and as regulator of the federal home loan banks. As conservator of the gscs, fha is obligated to conserve and preserve the assets of fannie mae and freddie mac. F hfa has undertaken a number of initiatives in recent years including some that begin prior to director mel watts tenure. One undertaking is the creation of the securitization platform. It was originally intended to function like a market utility independent from the Enterprise Institute that would be used to issue Agency Security and privatelabel securities. The platform has instead been developed specifically for securities issued by fannie mae and freddie mac. One important question as we embark on Housing Finance reform is whether we should utilize the csp or consider other alternatives such as expanding the jenny may platform. Another Important Development and Housing Finance is increased transfer of credit risk from the Enterprise Institute to the private sector. I encourage f hfa and the enterprises to continue to experiment with different forms of Risk Transfer including front end and back end structures. Transferring credit risk away from the government into the private sector is essential to protect taxpayers and build a more robust and sustainable market. Increasing the amount of credit risk worn by the private sector. And what the committee decides to take. And policies and options, and hiving Housing Finance reform, following the financial crisis. 7 republicans and 6 democrats, in this committee, and the Housing Finance reform bill, a key priority this time is to build on that bipartisan legacy, and the Housing Finance system for future generations. Thanks to see you again, thanks for your public service, the Bipartisan Committee process by which we consider, and Housing Finance reform is easy, some calling it an easy win for the Trump Administration, and restructuring of fifth of the economy is far from easy, should avoid considering how the Housing Market, and how to prevent emergency government and taxpayer intervention. And the governmentsponsored enterprises, gscs are prohibited from retaining any capital at the end of each following quarter despite the fact Companies Back more than 5 trillion in the Mortgage Market. Director watt has been raging his concerns about the capital levels of the gscs for some time. He was one of the first members of the house of representatives to warn about predatory lending prior to the housing crisis. And and to retain capital levels. And the old structure of gscs. This is surely a straw man. Protecting taxpayers in the near term should be a shared bipartisan goal. The committee should continue its work examining the gaps in the Housing Market and the housing crisis exposed. Exotic products putting prime borrowers at risk, and lack standardized terms and responsibilities for trustees and a nearcomplete breakdown in Mortgage Servicing and the ability of monoline mortgage insurers to fulfill their commitments. They certainly made mistakes to chase the market, to purchase pls, provide price and discounts to lenders based on volume using price advantage is to achieve shareholder gains rather than passing those benefits to borrowers. And lenders that serve underserved communities. Gsc admission is to provide a stable, liquid, National Mortgage market. Something we should all want it any Housing Finance system, and it was finalized in december. And and the changes congress makes, will impact any affordable fixedrate mortgage in the future. And who has access to it. The decisions will impact how easily and quickly a growing family can sell their current home and buy it more expensively. The decisions would impact which lenders have access to the system. Whether a homebuyer can do mortgage from a small lender in her town. These decisions are not just about backoffice operations or faraway capital markets, they have substantial impact on households across the country, whether renters or homes. Thank you for joining us, the Committee Seeks to understand the status of gscs and how we move forward without harming homeowners and buyers or protect taxpayers a greater risk. I welcome you, we appreciate the service we are continuing to give to deal with the Housing Finance policy of the nation. Honoring the 5minute role, the question of periods for those in line to get the opportunities. What i would ask you to give your full statement, children please proceed at this time. Ranking member brown, but members of the committee, thank you for inviting me to testify. You are well aware conservatorships of fannie mae and freddie mac, is Enterprises Supports over 5 trillion in mortgages. Of additional importance is taxpayer backing under the preferred stock purchase agreement, limited to 118 billion for fannie mae, and 141 billion for freddie mac and additional drops will reduce these commitments further. I will focus on three points in my Opening Statement. My first point is fhs a has made numerous important reforms to the enterprises during conservatorship that are beneficial to the Housing Finance system, my written statement discusses a number of these reforms and provide links to detailed reports. Despite these reforms, i regularly hear assertions that fannie mae and freddie mac are the same today as they were when they were placed into conservatorship. It is important to be aware these assertions to ensure those already made are not disregarded. Despite the reforms already made, fhfa is aware Housing Finance reform will involve many crucial decisions that go far beyond these reforms. The second point i want to make unequivocally as it is the role of congress, not fhsa, that shop the path out of conservatorship into the future of Housing Finance system. Among the important decisions for congress are the following. One, how much backing if any should the federal government provide and in what form. 2, what transition process should be followed to avoid disruption to the finance market and who should implement the process. 3, what roles should any, and how they play those roles effectively. And was Regulatory Framework and authorities are needed in a reforms system. And who will have the responsibility. I reiterate it is the role of congress to do Housing Finance reform and i encourage you to do so expeditiously. My final point is to identify and discuss the most significant challenge fhsa faces reform. Additional withdrawals reduce the amount of taxpayer backing and the foreseeable risk that uncertainty could adversely impact the Housing Finance market. This challenge is significantly greater today than it has been and will continue to increase if not addressed. When i first discussed this in 2016 each enterprise had 1. 2 billion under the psd as as a buffer about additional withdrawals of taxpayer support in the event of an operating loss in any quarter. On january 1, 2017, the psp a buffer reduced to 600 million and on january 1, 2018, it will reduce to 0. At that point, neither enterprise will whether any quarterly loss without drying further taxpayer support. The gap accounting for any number of noncredit related benefactors in the ordinary course of business regularly results in large fluctuations in gains or losses. And the value of the deferred tax assets. Like any business, against shortterm operating losses. In fact, it is especially irresponsible for the enterprises, not have a limited buffer, and an additional withdrawal of taxpayer support and reduced treasuries, fixed dollar commitments under the psp a, the we reasonably foresee this could he wrote investors, and increase the cost of mortgage credit borrowers. As conservator, fhsa, cannot risk these consequences and meet our statutory obligation to ensure that each enterprise fosters, quote, liquid, efficient, competitive, and resilient, national Housing Finance markets. In our conservatorship role, fhsable take actions as necessary to prevent additional withdrawal of taxpayer support. Neither this committee nor anyone else should view such actions either as interference with the prerogatives of congress, we will take only such actions is necessary to avoid normal operating losses, thank you you stand ready to assist the committee, and anyways we are requested to do so. Thank you very much. My first question i would like to focus on Credit Capital. Among the reforms listed in your written testimony more fully, you discuss the efforts the agency has undertaken to increase participation of private capital in the markets. An important component of the scorecard has been reducing taxpayer risk by attracting Credit Capital and shrinking the footprint of the enterprise system. Under your leadership fhsa has seen a significant increase, and i encourage you to increase. In addition to existing Risk Transfer deals, what can fhsa due to increased taxpayer risk and attract more private capital to the Mortgage Markets . The first thing we do regularly is not take loans people cannot afford to pay. We have a defined credit box and we tried to encourage lenders to use that credit box but we will not take a loan outside the credit box. One thing we have done is innovate in the Risk Transfer space. Moving first, the second lost position or intermediary positions but moving to first loss positions when it is financially feasible to do so. I think the objective here is to make the whole system as responsible and not move back to the practices that were taking place. Achieving this objective is one of the important things we seem to do here, to withdraw Housing Finance policy, in this round to capital at the enterprise that you discussed with us. On january 1, 2018, the Capital Buffers of the enterprises will drop down to 0 requiring fannie mae and freddie mac to draw on their lines of credit with quarterly loss. This reinforces why conservatorship is unsustainable. Taxpayers on the hook for losses and the government effectively taking all the risk. I understand you have concerns with Capital Buffers, and address this issue. It does not change the need for longterm Housing Finance reform. Suspending Dividend Payments, reform is not urgent and maintaining the status quo is sustainable. Could you please respond to that . First of all, let me say we will try to avoid a draw at all costs because risks associated with it and as conservator, our position is a little different than anybody else. I like and it to the situation several weeks ago when i went home and had a letter in my mailbox that said my car was subject to recall because of the airbag. A number of people saying the risk of you driving that car is minimal and i absolutely agree. I was the responsible party and my family was going to have to ride in that car. In this situation, the card you have given us, fannie mae and freddie mac, our responsibility to keep them safe and sound, to make them efficient while they are in conservatorship and it is your responsibility to change cause if you want to after that. Do you believe the f hfa has the authority to withhold Dividend Payment . Without the consent of treasury . Yes. I also want to assure you my first option obviously would be to work with the secretary of the treasury. These are contractual agreements, not legislative agreements. It is a contractual agreement between us and the secretary of treasury. Modest changes is the first and most prudent, the responsibility for that risk falls on me as the consumer. Why you believe you have any authority, without getting agreement from secretary of treasury and dealing with this. You talk about potential and swat impending concerns about tax reform and shortterm losses. The Corporate Tax rate, and others come to that, you dont know yet, and f hfa limits, they retain capital, as you spoke about, prohibits capital next year. And what it would do to access to mortgages in the broader Housing Market. If you would dig down a little deeper on what tax reform goes. They can range, from our analysis, 5 billion up to 25, 26 billion. Obviously the extent of those tax reforms, that is a shortterm impact, it is not a commentary on the value of the reduction in Corporate Tax rate, we are talking about the shortterm impact of that tax rate cut, and one of the things we are regularly doing is talking to treasury and monitoring what is happening in that taxcut space. And if possible, they could phase in the first tax cuts, to protect enterprises in conservatorship. And evaluate them. We are constantly making that evaluation. It leads to quarterly losses about accounting principles. How you account for hedging against risk. Those are things that have nothing to do with whether you extended good or bad credit, no credit related factors, but the enterprises losses bounce around regularly, going to 0 in a buffer could come in any quarter, put us into a situation where we could end up making a draw. One could have impact, and the gse bulk contracts. These contracts, and in cincinnati in cleveland, you prohibits bidders, and using contract for deed and on any singlefamily rental deals Going Forward. We look at that, Ranking Member brown. We always change prospectively, those and criteria requirements, the we impose on, we are looking at that issue. Thanks for being here today. Thanks for the job you are doing, in multiple conversations, the future of Housing Finance reform, you are relying on us to make that happen. There is a lefty think tank and writey think tank, the chairman and Ranking Member wish to take set up in the near future and your perspective, and how we determine the future of these entities, we have made some reforms of the enterprises, i dont want those disregarded because the conservatorship process i outlined a number of them in my testimony. Didnt have a chance to do it in the short time in the Opening Statement, they are outlined specifically to my longer form written testimony with links with details about them and in a sense, gse reform, and the committees responsibility and congresss responsibility is Housing Finance reform. I dont want the issue, we had a recent conversation last quarter regarding the building up of capital within the entities. The two entities have 258 billion worth of capital. There are motions of running out of resources, a baseless issue. It changes the dynamic of what is happening, makes it appeal that there is a different approach taken by the administration. The administration is working with us to move ahead with reform but all of a sudden a little lateral step, 58 billion of capital, and we have exactly that same type of thing to fannie and freddie, 258 billion worth right now, to act as if drying of this made available credit, when us taxpayers already are 100 backing of these entities, creates a different direction which sends us a signal to the world Something Different is occurring, we established today you have 258 billion available if you draw up on it that is what it is for. In no way affects the credit or anybodys perception of securities being put out. I hope you address that is forthright as i could in my Opening Statement, i have addressed it repeatedly. I hope you heard the analogy i used, you gave this car to drive for five years, you said keep them safe and found, make them efficient and if there is a risk, that a draw or a reduction in the commitment that backs these enterprises would interrupt the market. It is small. I acknowledge that. Not trying to overstate it. If it happens, and what we say is reasonably foreseeable could happen it wont be you that they talk to about it, it would be the conservator. We are the responsibility parties for this. During conservatorship. You are the responsible parties for it. It will have more effect. I would not run that risk, that would expose me to the same risk that im trying to avoid. We had this conversation before. Believe me, i cant afford to take that risk any more than i can afford to drive a car that has a recall on it with an airbag, and make that analogy, live up to that responsibility, as a conservator, that is why you approved me, i dont know what else i can say about that. I cant say i will assume. It is one of the more baseless arguments i have ever heard. Any company in america that has accessed to a 258 billion line of credit from the Us Government i dont think would be concerned about market fluctuations. Something happened recently, i dont know what it is. We can get into a question whether there is adequate are not adequate, 4 trillion portfolio, i am not saying this is a large risk. I cant afford to take it as conservator, that is the point im trying to make to you. Senator tester. A number of things you talked about. Do you have a figure that would be appropriate, so much of the portfolio, as taxpayers. The new loans that fit the criteria. The goal is to transfer 90 is attainable. In normal times, i have exceeded that goal. If you require it, there is a downturn and investors walk away, you have made us adjust, subsidizing the transfer and we dont want to do that. We always do that based on rational economic decisions. The problem we have is when you write that and say you must do it, it really is an imposition into the market that is neither justified, nor is it reasonable to do that. I think i dont want to speak for everybody. A fair number of folks went to see private capital take the risk off of the taxpayers. The question is we want to make sure you or whoever is in your position is as active as possible to get private equity into the entities. The question is how it should be written so as not to tie your hints but yet make sure you maintain aggressiveness. It would be appropriate to set a goal and give us flexibility based on the criteria we talked about. We share the goal of doing that, you could get into a situation where you are requiring us to make noneconomic decisions if you say you must do it regardless of the economic circumstances. Is it possible to have the 30 year note without explicit government guarantee . I think that is more into the Housing Finance reform area than it is for me to say because i could give you my personal opinion which is not worth much. I really try to keep from doing personal opinions. Close to expressing an opinion of our agency, we have not developed an opinion on that. Your opinion does mean a lot quite frankly because you are in the business a lot more than we are. We are depending on you in that regard. I have read a number of experts in this area who do not believe it would be possible to do. I presume there are credible arguments. Talk about the buffer a little bit, an agreement to treasury. It is. You say it is down to 0 x 2018 which is coming right up. By your Opening Statement you indicated you dont think you need to have a buffer. How much . It could very because our objective is not to make a draw. We want to cover first the normal fluctuations in operations. We want to monitor what is happening on tax reform because that could have a major impact shortterm on our loss situation. Give me a ballpark figure. It is hard for me to do that, senator, because has Steve Mnuchin or anyone from the Trump Administration approached them or have they approached you about a buffer amount . We had discussions with the secretary of treasury. You have him before you next week. Do they give you a number . Not a specific number. Opposed to a buffer at all . Did they talk about it at all . Thank you, mister chairman. Thank you for holding this very important meeting. Thanks for coming out this morning and share your thoughts and views of the agency. You may know that this is a state where 1. 4 Million People live in distressed communities which is why i spent a lot of time, what i call the opportunity agenda looking for ways to help folks relieve those stressed communities and experience their economic potential and climbing the economic ladder, most of us would suggest living the American Dream means owning your own home and the reality of it is getting there is critically important, ways to help folks get there in a way that is responsible. There has been a lot of conversation on the fact that today we are seeing the firsttime homebuyers since the 1970s, we see a decline in firsttime homeowners, those people in distressed communities are disproportionately representing folks who are not able to climb out. And the net worth of americans can be seen in the equity in the home, the net worth is under 10,000 refinanced and those who own their home, 200,000, 20 times more. Paying utilities on time, use the data, evaluating their desire, statistics, 26 Million People who are visible, they are updated to the latest model. You have been considering updating the credit score model, can you tell me how much progress you made in that direction and what your thoughts are ongoing on an antiquated system that leaves so Many Americans without credit worthiness, and what you think about heading towards the model sooner rather than later. We have set as an objective to get through this process by the end of this year. And i want to tell you it is going to be a lot simpler than it has turned out to be. The primary reason for that is any time you Start Talking about changing the credit scoring models, you are setting off a sequence of events that are very costly for people to change and changing back and forth between competing models is difficult for the industry to do, so we spent a lot of time trying to figure out what impact what that would be going to a new model. We know new models will take into account different considerations. The enterprises themselves and underwriting systems are trying to take factors into account, what most people assume, dont always rely on credit scores, they are factors in making these decisions, they have independent evaluation for automated underwriting, that will make these judgments. We have been asking them to do the innovation that is necessary but not be irresponsible because part of the reason a lot of people are having this problem is their credit was so damaged by bad loans they got in before that they havent been able to dig out. It is a multifaceted problem. The chairman helped me realize the banking committee, still 5 minutes, i am going to stretch that a little bit here. Number one, the fact of the matter is the cable on time, cell phone on time, that is necessary information for making a credit decision, and 76 of south carolinians, and south carolinians able to be scored. A large footprint in the marketplace, and south carolinians senator cortez. I will shift gears a little. A new senator from nevada. Great to have you here. Fhsa has improved servicing standards, have not gotten to the core of the problem. 2011 they released a white paper looking to overhaul the way the gse pain servicers did not complete work in this space. The legal settlements and gse pools raised servicing standards, they stand a profit from default and modifications are costly. They have an incentive to abstract fees from homeowners and investors and homeowners are powerless to fire their service or if they are not satisfied. Do you agree we need to address the way servicers are paid so they dont profit more from foreclosures, keeping families in their homes. Will it do further work in the space or is this up to congress for finance reform . I agree something needs to be done, serious concern, and because lenders have servicers and the bulk of the people who compensate services, they must be able to get there without their consultation. I dont know that legislative, there is a legislative solution but we are working aggressively with it, and going through the problem. And mortgage payment. It became a much more difficult exercise and did not necessarily follow the complexity of it so industries got to catch up. A more normalized time where it might not be as work intensive as the way you are going to pay a service or. Servicing alone. And an accounting thing. It was ground 0 for the foreclosure prices more interested in fees and costs for the foreclosure making sure the loan was performing. Structure, hope your commitment to seeing that. They work aggressively to try to help, there is movement needed in this area. Your time is running out. The deals undertaken in recent years have benefited large banks that use vertical integration model. The big banks originate the loans, sell the risk to the market, one concern raised about the structure is if it is scaled up too much you may choke off lender access to the Mortgage Market. In other words small lenders, largescale operations and securitization affiliates. As congress contemplates the next phase for gse reform, needs to be mindful that credit risk sharing deals particularly those involving upfront risksharing dont box out small and communitybased lenders . We definitely need to be aware of that and we are aggressively working on making sure that does not happen because one of the things we tried to do during conservatorship is make sure large and small lenders are treated alike and that should be true in the credit Risk Transfers. Thank you. I know my time is up but i will submit additional questions for your response as well. Thank you, mister chairman. Welcome. Good to see you on this side of the capital. Thank you for your service and being here this morning. You and i discussed Residential Property assessed Clean Energy Loans commonly referred to as case loans, case lanes actually, they get super lane status through local tax system and how they affect the tax market. Our that arkansas has these residential case loans that many other states do. These loans are unusual not only because they are lanes but because lenders are not following truth in lending environments for exposure. As a result these loans are often high interest, 12 for 25 years, they include home lanes that junk priority even though they come after the mortgage contain no federal exposure or underwriting and we have seen examples of severe consumer abuse which im aware of a case of n86yearold widow on Social Security dealing with severe dementia given a case loan without disclosure or underwriting for more than 100,000 and she may lose her home. To address this scandal, the house of representatives and i experienced legislation that would clarify the truth in lending act applies to the case loans. I would like to discuss fannie and freddies position on these things. Do fannie and freddie purchase or refinance mortgages with case lanes attached . We have a policy against doing that. The problem is these liens are put on after our loans are already made and they jump ahead of fannie and freddies lien position which has been our primary concern. Show up in the tax office in the registry office, after put on after we have made the loans that were superior to them to jump ahead and got to notice that so that we can adjust for it. There are multiple problems. Your bill will address some of those with primary concern. These tax liens, most people think of a tax of a wider group of people, not a single homeowner. And runs counter to that theory, treats them a superior tax lien which we have already taken any time we make a loan, you put 25, 30,000 renovation, efficiency, it may be worth that, we dont have control over that, a serious problem for the Mortgage Finance industry so we prohibit it but limitations to even how we find out about it. My legislation, and oftentimes vulnerable consumers exploited by predatory lenders by applying truth in lending act, even if that act passed, we would have separate issues, a superlane, it is retroactive, the separate record system. And that financing system, a low piece of information. No rational reason. A superior tax lien, and Interest Rate, 11 , 12 , when a lien subordinate to it going at 4 , 5 , that is the market rate. There are preferences this year that is not something that is working in the marketplace. Thank you for protecting taxpayers for a scandalous program. There are real problems in the case loan system, i hope you preserve that system. I talked to your counterparts. Secretary carson as well and see what we can do. Thank you for your time. Thank you. Service is exemplary. As the ranking democrat, the first committee, on the question of Housing Finance systems, layout a few principles i think are important. A system that ensures broad affordability and access including homeowners in highcost states like new jersey, standards that kept people in their homes, providing homeowners with sustainable modifications. The protection of taxpayer dollars, to concentrate the market in the largest institutions and clear obligations to serve low and moderate income borrowers and support preservation of Affordable Housing, look forward to working towards those goals with those who have similar views. My home state of new jersey continues to struggle with underwater foreclosures and from 2007 to 2016, 85,000 new jersey residents lost their homes to foreclosure, 3. 2 million homes around the country still have underwater mortgages including 9 in new jersey. In 2014, fhsa announced it would sell the liquid loans in bulk in order to reduce risk to taxpayers and help families stay in their homes, the enterprises hold off 11,000 loans in new jersey and recent plans to do more. I was pleased to see the new jersey capital win the bid on Community Impact pool of 158 loans in the new york area. In my mind that Community Oriented organization like new Jersey Community capital with vested interest in the neighborhood improvements can achieve outcomes, usually benefit borrowers, and enterprises themselves. What i want to know is what fhsand the enterprises can do to provide greater access to loan sales for communityoriented institutions like new Jersey Community capital who are better positioned to help borrowers stay in their homes and understand fannie mae is prohibited from direct sales of assets. It could offer pools for nonprofit bidders given the proven track record of community capital, this would require Greater Community benefits and out what can be done later . I would like to encourage fhs8 to preserve sales exclusively for nonprofits. We have done a lot of work in, getting risk off of enterprise folks but an important purpose was getting loans into hands of people with more abilities and we have, fannie and freddie because of our statutory limitations to to the kinds of Community Preservation and stabilization work, and as an objective trying to get these loans to people who are responsible which is why we have gone back and changed criteria for bidders to write in certain requirements they have to comply with, whether they are communitybased or big purchasers. What we did is reduce the size of the pools because the biggest impediment to nonprofit, nonprofits generally are nonprofits. They dont have money. You need money to buy these nonperforming loans, we are statutorily obligated not to give them away. We cant do that. Reducing reducing the size of the loan pool, very critical, 8 or 9 community loan. Die organization in their state. And quit selling these loans, to big wall street firms. If you buy them, you have a vested interest in Community Stabilization. You are closer to the community. We can identify loans in your state, and you could help the nonprofits or you as an entity as state or local government could get into this space and we are close to dealing with the state of new york, the bulk of these loans are in florida, new jersey, new york, five states where the bulk of them are. We are trying to be as aggressive and innovative in this space as we can be because we share the objective of getting some, having these decisions about stabilizing communities as close to the neighborhoods as the decisions can be made. We look forward to working with you and suggesting some ideas to achieve that. It is not only about Community Stabilization but also the reality of communities of color having a place to call home. We will work through the rollcall. Senator crapoh will return shortly. Good to see you. You wouldnt remember is this but the first congressman i ever met with you in 2004 at cornelius, you were very gracious, and attentive. I appreciate your indulgence and now your indulgence now. I am still one of your constituents. You were right in the position you talk, we got to prevent a solution, i have to believe, in response to one question, implement you implement it enterprise reforms, the best growth to get to a bipartisan something that ultimately comes out of congress is to be instructed with the views of the white house and the views of your organization, in terms of boundaries or priorities do you agree with that and what would you envision as a good first step to see proposals over the past couple years, but to kind of get a universe of what the good ideas are, youre on the ground experience, can you talk about that . I have gotten a lot of criticism, i took fhs a out of the Housing Finance discussion. Seemed to be our role was to manage the enterprise conservatorship and what i affectionately call the here and now. We never developed an Agency Position on these things. I agree with you if somebody asked us to do that. We have a lot of experience, just not in our statutory mandate. I havent wanted people get critical when i get out there and advocating for certain principles in Housing Finance. I have been asked to do that and it is not part of my statutory mandate. It is not necessarily the case. And the details two minutes and 30 seconds left. I would try to do aggressive in that space. It would be helpful as relates to discussions about where we go forward with tsa reform, the in state of fannie or freddie or a newly combined institution. And the last few years. It relates to the delay in pushing back, the underlying system, to express concern, moving forward with that, you said when but not if. It is a matter of working through technical difficulties, this is a major undertaking to build the platform, learned a lot and tried to stay on a schedule but nobody should read that we were not it is achievable, how would you rate the soundness of the implementation, investing a lot of time. And some idea whether that needs to be looked or planning purposes. It is sound, we built a little relay into the timeline. We want to reextend again. To maintain that. It is critically important, a single security to save the taxpayers a lot of money. And helping support the tba market and increased put it in the market. They were committed to it. With the chair and Ranking Member, to engage you to this show, fully harvesting knowledge and expertise and opinions on how to move forward if we are going to get a bipartisan salute solution that is our obligation. Thank you. Thank you. Congressman watt and director watt, how pleased we are to have you here and what a fine job you have done in this position, we are grateful for your service to our country. On the quarterly dividends to the treasury, i know you will start putting a buffer in as well that you talked about a little bit earlier, do you expect that flow will be positive for the foreseeable future as you look at markets . I expect it to, yes. Different factors i outlined in my Opening Statement adversely impact that especially when done on a quarterly basis those fluctuations can be exaggerated. One of the areas from my state, manufactured housing, i encouraged your agency to figure the server for many years because i believe it will increase affordable homeownership particularly in rural areas. The program for manufactured housing is a good start but i encourage you to expand those efforts and the duty to serve is making progress. How do you see that rule impacting manufactured housing particularly in the channel . Having a duty to serve, approaching it the way we are approaching it is the responsible way to do it, it is an area that sandy and freddie have not been involved in, certainly not in the last 8 or 10 years during conservatorship. A specialized market, we have to get involved in it in a responsible way. Some people wanted us to do, and try to do the same thing in the channel space that we do in the fixed housing space, right . Because there are different challenges and different obstacles come and there are different risks associated with it. And we have the response of the process of those risks and be able to meet them and price them appropriately. When you look at affordable Home Ownership, which i know has always been one of your cornerstones, various legislative proposals weve heard have been offered that would change the gses from the current status. One of my fear is that if the wrong changes are made it could endanger the American Dream for middleclass families who could be priced out of a mortgage. Do you share concerns around the 30 year fixedrate mortgage that those changes could make that more difficult or could lead to higher Interest Rates or make it harder tomorrow . I think thirtyyear fixedrate mortgage has become standard for american homeowners, and its important to retain that. How it gets retained or what is necessary to retain it i think is the subject that this committee and congress will have to address. But i do think that it is an expectation that American People have, because it has always been there. What are the changes to the Current System that worry you the most in terms of maintaining accessibility and affordability . I think most, a lot of the plans that ive seen some elements of trying to protect affordability. I do believe that that is important to do, and i think the American People believe that it is important to do. So how that gets done and how it gets structured in Housing Finance reform i think is more in the Housing Finance reform space that it is in the conservatorship. I want to commend you for your leadership, for your steering this into a very stable, solid position that youve done a strong job in trying to follow the mandates that are there. Youve taken a terrific leadership position, and again, i just want to say how grateful i am for your friendship is off. Thank you so much. Thank you, mr. Chairman. Director, youve made it seem as you. There is a boat going on. I wasnt aware of that. I do expect some senators to return, and while we are waiting for some of them i will take another turn at questions. Return to the issue that senator corker discussed with you. As i understand it according to the preferred stock agreements, treasury has committed to buying senior preferred stock to ensure freddie and fannie maintain a positive net worth. There is curly to win a 58 billion Million Dollars of treasury assistant under these agreements that can be accessed currently. Senator corker, i do want to speak for them but as understand his point, he is saying that the markets know that this agreement is in place at that this option for the conservatorship is available if there is a problem, as youve described it. Potentially could come. I understand you to have concerned about whether, i guess, what are your concerns about using that option to deal with the problem i it is an isse that arises . I think, senator, tragedy when using the market to know, i think if you ask most people out in the public, there is actually the opinion that theres an unlimited guarantee to the space. And thats not true. And if you continue to erode the amount of the backing, i think that becomes more apparent to investors. And it runs the risk that it could start to have an impact. And thats all i have said, and so i think its important not to draw more because if you draw more, it will reduce that explicit dollar amount of backing. Its already out of whack causing some unease. Its already out of whack because if you look at it, fred is substantially smaller than fannie, but freddie actually has more backing than fannie does. In the context been, what is the solution . Is it to stop sweeping as much, which recommend that the treasury agreement for the sweet to be adjusted so that the buffer could be created . What would you think would be the appropriate way to protect against this problem . There are several options that we can look at. They are not legislated options because at the sba is a contract role agreement. And i think the appropriate conversations about those options really need to take place between us and the secretary of treasury. The problem is that if the Committee Sends to the secretary of treasury a message that this is a nono, to have those discussions or to try to resolve this in a coordinated way, then it leaves us, it leaves it to us to have to unilaterally deal with it, which is something that i would prefer not to do. Which gets back to the dividend question. Right. But there are ways to address this by minor adjustments to the pspa. And thats not a move toward recap and release. Its not an invasion of the prerogatives of this committee. Its not an invasion into Housing Finance reform, but we have to have that leeway to do it. And if the two of us dont have it, its a bilateral agreement. If the two parties cant dance, then i may have to dance by myself, and thats, thats not a pleasant position to be in. [laughing] and it may not be pretty, but, but i have the ultimate riskier, its a point that i keep trying to make, which is why i made the analogy to my automobile and the collision bay. Somebody has to assume that ultimate risk, and right now unless we can assume it together, it also me. You are referring to you and treasury . Thats correct. I appreciate what you read iterated several times i do want to restate it, that any of the news you may boldly make, whether it is agreement with treasury or a unilateral move, which i do not point you should make, that those are not moves towards recap and release. I think one important point today that point is made and ive heard it being made. I also believe that this conversation puts a highlighter, an exclamation point on it, one of the other points today that you made which is we need to move expeditiously to resolve this issue here in congress with appropriate Housing Finance reform. I think this really highlights that concern. That being said, i just want yoo delve a little deeper and clarify. Im hearing you say that you feel, tell me if im understanding you wrong, that you feel that a draw on or an action under the current agreements to sell additional preferred stock to treasury to keep that buffer in place, should we end up in a problem, is a less preferable option, or would be received less favorably in terms of its Market Impact than an adjustment to those agreements entered into mutually between you and the secretary of treasury. Its outright . I guess my question is this pretty seems to me we have some preferred stock agreement or stock purchase agreements in place, if accessing the strings of group is going to create market unease, would adjusting disagreements also create market unease . Not to do with a shortterm loss law situation. This is just about dealing with a shortterm possibility of a loss. I dont think the market would react to that. I think, you know, from everything ive heard, senator, this reducing buffer was designed to put pressure on congress to do Housing Finance reform. It was a threeyear, 3 billion, down to, you become pitches went down. But if he gets 20, theres no buffer there. Theres no operating reserve that we can rely on. We would have to make a draw. And that would be i think, it could be, and it shouldnt say it would be, it could be unsettling to the market, and we can as conservator or afford to have that happen because then you start to adversely affect the pricing of mortgages. You run the risk of having liquidity issues in the market. Now, it may be farfetched. It may be, but calm and people can talk about it in theoretical terms, but you are concerned about the actual let me say i tend to agree with senator corker, and perhaps a conversations you have with me and him today can help to allay that worry in the marketplace, that utilization of the terms of the existing agreements should not create any undue concern. That being said, i understand your point and i think it just highlights that both you and secretary treasury need to look at this, and we in Congress Need to work in getting a permanent solution in place. You do need to understand, mr. Chairman, that a term of a existing agreement gives us the authority to the declare or not to declare a dividend. Thats not what i am lobbying to do. I think a better solution to this would be a joint solution. I agree with that. Thats what i was getting too n my earlier questions. Thank you for that. Senator heitkamp. Thank you, mr. Chairman. Im going to go back to the 30 year fixedrate mortgage. Dont size so heavily. I think, i just want yes or no questions, mel. He believe that a federal backstop is necessary to ensure a 30 year fixedrate mortgage . I am signed because our agency is not developed a position on that, and so anything i could give would be my personal opinion, and i have, since i took this position, just assiduously stuck to the notion that i should not be expressing my personal opinions as opposed to agency opinions. I will tell you one of the greatest challenges we have in my state is housing, whether it is rural housing, whether its Affordable Housing across the board. Ive done economic roundtables, number one, housing. Access to housing, Affordable Housing. We cant have Rural Development without housing. Weekend of economic Development Without housing. We need a workforce and that workforce to come to north dakota make sure they can afford their house. And afford a place to live and live in good neighborhoods. So i understand and i probably know what it means, but the next question is, in absence of a federal backstop, what options with a middleclass family have for getting access to a home loan . Again, i think this can you would have to define those options, and i want to go back and reemphasize my position again. My responsibility as conservator or used to manage in the state that we have now. Thats what i tried to stick, stick to my knitting, as they say. I think when you get into defining what will be necessary in the future, thats Housing Finance reform, and i think it is congress is responsibility to do that. I dont mean to sound like im trying to avoid the questions that youre asking, i just i dont want to be criticized, and once i left congress, i didnt think it was my prerogative anymore to express personal opinions about how legislative things needed to be done, especially as long as i am the director of an agency which is not develop an Agency Position on it. When will you develop an Agency Position on it . Well, we wouldnt advise you all ask us to do if you ask us to do a couple, because its not and are statutory mandate now to do future so maybe we can get this, get to this in a different way. And i would ask you whether your agency has conducted any analysis of what complete privatization would mean for access to mortgage credit and corresponding impact on middleclass families . I dont think our agency has conducted formal research on that. We are aware of literature, and we obviously had people in our agency who probably have great expertise and could develop i think thats the point. The point is your agency does have great expertise that no one in government knows whats happening in the Mortgage Market, knows whats happening anin Affordable Housing. And i include hide in disco knows what you know. You see it everyday. You have the metrics. We need advice. We need information and we will have a choice. We will have a choice on whether were going to take that all important provision of the American Dream, which is homeownership, and make it completely and accessible for middleclass families. That is a Major Initiative for us and it is a major concern. And so at some point we do need to have some analysis using the data you have on what works and what would not work. We can listen to the Mortgage Bankers we can listen to the Lending Community who expressed great concern about complete privatization. I think we had a proposal, may be starting out corker one, then became crapojohnson. But i think we have got, weve got to have your advice. You cant play coy on this, and enough we are not being coy. Im not saying that as a pejorative. I just think youve got to engage and give us advice and data that could help us make we regularly and technical advice, any proposal that comes out, we will say look, if you do this, it will have this impact. So i just asked you if a completely privatize whats the impact . Well, if thats the proposal that is out there, it is out there. Im not sure its out there on this side of the capital. Its on the other side of the capital. Im over my time. Im sure well have more conversations about this in the future. Thank you. Senator schatz, i apologize, i skipped over you. I apologize. You got here earlier than some of the senators. It is your turn out. Thank you, mr. Chairman. Director walked, i wanted talking talk about the role a fan and freddie and financing multifamily housing and the importance of this sector for providing Affordable Housing, multifamily housing is often overlooked when we talk about Housing Finance reform. Im aware that fhfa is to make an effort over the past few years to realign danny and fridays activities with their core mission under the law of helping Underserved Community such as low income and Rural Communities practice includes their work on financing the family housing. Have you seen progress in motivating gses to finance more affordable multifamily housing for low income families . Yesterday when we cap the amount that they could do in the upper end and said you cant do anymore because then you would be taking business away from the private sector. They turned substantial amount of attention to the affordable space. So yes, we have seen substantial progress in that area. And i think youll continue to see progress. Im glad you focus on this because a lot of the questions sometimes assume that our responsibility as fhfa and fannie and freddie is responsible is only on Home Ownership, is actually an access to Affordable Housing, and were supposed to be agnostic really about whether its Home Ownership or rental. Obviously because most people think the American Dream involves homeownership, there is more emphasis on that. We are playing an active role in the affordable rental space and the private sector is playing a very active role in the other part of the rental space. We control the amount that fannie and freddie play in that space. So theres a lot of talk on this committee and elsewhere when they talk about Housing Finance reform about the macro aspects of this. I want to drill down on what we can do to build more multifamily units, apartment buildings, rentals, whatever it may be because it strikes me that heidi and i have the same problem. I see Chris Van Hollen from maryland nodding as well. This is a problem in every part of a state. The question i have is there more that you can do administratively to push in distraction to sort of reorient your agency . The other question i have, is a statutory impediment that we might be able to work on as we do reform . I dont think we have statutory impediments in this area. The one thing we have done to get more aggressive in the space, especially in Rural Communities, is the duty to serve rule, which obligates the enterprises to take aggressive steps to serve underserved areas. And a lot of the problems in underserved rural areas, because fannie and freddie have not been backing manufactured housing. They dont do chattel lending. So the duty to serve rule is forcing them to look at in a responsible way how you might, how they might be able to do more with manufactured housing, which is, you know, it is a major part of the Housing Stock in, especially in rural areas. So if we dont do something in that space, then where missing an opportunity to support housing for people in rural areas. We finally got the legislation was out there since 2008. I run was made at putting a rule out there in 2010 and then it was put on the back burner. We finally have finalize the duty to serve rule, and the first plans, proposed plans for the gses have come forward in the last two weeks, in fact. Thank you. Thank you. Center to van hollen. Thank you, mr. Chairman. Director watt, its great to see you. Thank you for your service in the congress and your good stewardship at fhfa. And want to thank you for exercising good and prudent judgment on behalf of the nation that youve been entrusted with. We all know that families across the country were devastated the financial meltdown, 5 million americans lost their homes, and the recovery has been uneven. And if you look at my state of maryland, if you look at Baltimore City, Prince Georges County and some of our rural areas, they are still not fully backed on their feet. They are facing challenges axis a credit, foreclosure, mitigation, neighborhood blight. Can you talk about the tools you have at your disposal to address these issues . And if it also take a moment to discuss the progress we may be making with the Neighborhood Stabilization initiative in Baltimore City . Well, we started Neighborhood Stabilization with detroit, chicago, and one other, and then we expanded it substantially. And one of the places we expanded it to was baltimore, because, and we just went down the list of the most vulnerable neighborhoods. We didnt do this, you know, just off the top of our head. It was done very scientifically. So i think what that does is it gives fannie and freddie more latitude in how to dispose of properties in vulnerable neighborhoods. It gives them the opportunity to work with nonprofits who were in the community. And in some cases where its going to cost them more to go through a foreclosure process and the property is worth, it gives an even the opportunity to contribute housing. It has to be a financial decision, obviously. So i think were making progress in all of the cities that, and they are primarily cities, because they were high concentration areas that guy hit very, very hard in the crisis that cant hit. Im looking forward to working with your team of that, spatial in maryland. A question about the National Housing trust. Because one of the things the state of maryland and some of our counties have used very effectively is the idea of Housing Trust and, of course, to be effective, Housing Trust really require a source of dedicated revenue so that they can make decisions with their Development Partners and allow these projects to be capitalized in a timely manner. Last year we saw i believe the first installment of funds from the National Housing trust fund dollars. Can you talk about the importance of that fund and give us a sense of how you think its going to be capitalized Going Forward . Well, it is on the statutes now, and it was suspended administratively, and it took a lot of heat for reinstating it but it was a statutory mandate and i didnt see a reason not to follow the statute, as i told this committee when i appeared before them in my confirmation process. And since that has occurred in 2016, 382 billion, million, im sorry, Million Dollars, not billion, has been contributed to the trust fund in 2016. And 455 million has been contributed in, based on 2016 earnings, because its always a year behind. So we dont have any control at fhfa about what happens with the funds after they go over there. They go over to part to hud a Party Treasury so we dont have any control over the disposition that has been made of those funds, but we did have the authority to make the decision to fund, to reverse the decision that had been made not to fund the Housing Trust fund. And we made it and i think it, hopefully it is serve a useful purpose. I want to thank you for making that decision. As you pointed out, that was consistent with the statute or appreciate your moving forward at a just what you do know that maryland is using its allocation of those funds effectively. So thank you. Appreciate it. In committee chair. Thank you. Senator warren. Good to see it again, director watt, i am glad that this committee is tackling Housing Finance reform again. I will push the same point i push since i joined the senate in 2013. We need to end the government conservatorship of fannie mae and freddie mac and we need to do so in a way that protects taxpayers, establishes an explicit and pay for government guarantee. And provides more Affordable Housing option for people in massachusetts and all across the country. Now, on the question of access, director watt, as you know, cfpb his current mortgage rules defined certain loans as qualified mortgages or qam, and offer lenders legal immunity for loans that meet the queue standards. But cfpb also grants to you in status to any mortgage that is eligible for purchase by fannie mae or freddie mac. Which means that the underwriting criteria at fannie and freddie help define the scope of the queue and rule and accordingly have a huge impact on the kinds of families back and get access to mortgage credit. Despite all this, fannie and freddies underwriting algorithms and criteria are kept secret. So can you explain why it is reasonable to keep this information hidden, given its importance both to the economy and to appropriate oversight of the Mortgage Market . I dont know that i can explain that to you, senator, but i can have our agency explain it to you as we understand it. But im not sure that i have focused on that as an issue. Let me suggest this way then. I think it is an issue and instead of explaining it to me, what i would really like to do is get a commitment as soon as we can that we would make this information public. I wouldnt make that commitment without knowing why its not public and so that would be part of why would bp as long as he entities are in conservatorship and as long as their standards are setting the boundaries of our consumer federal protection issues, i think its important they be public. We cant exercise oversight without that. Let me ask another question and that is about principal reduction. In the 2008 bank bailout, congress required fhfa to adopt a plan, and im going to read, that seeks to minimize assistant for homeowners and minimize foreclosure. And, to specifically required fhfa to consider principal reduction to achieve those goals. That was in 2008, and for years fhfa did nothing and people kept losing their homes. And when you were nominated to run the agency in 2013, you said you would tackle principal reduction. I asked you about repeatedly, but for two years after he was sworn in, you didnt of an inch on this. Finally in april 2016 you announced a prince or reduction program. That eight years, and literally millions of foreclosures later. Even then use Eligibility Criteria that were so demanding that, by your own calculations, only 33,000 borrowers in the entire nation would qualify for principal reduction. And worse, he didnt actually require services to reduce loan principal for those 33,000 eligible borrowers. You only required them to quote solicit borrowers eligible for principal reduction modification no later than october 15 of 2016. All right, we are are nearly seven months past that, october deadline. Look at fhfa quarterly foreclosure reports that i cant find any information about how this program is working. I just want to know, how many of those 33,000 eligible borrowers as of today have actually gotten a principal reduction . I cant do the exact number but i can tell you its a small number, the 33,000 is a small number and ive tried to explain why that is so speedy ice at 33,000 as 3000 as a small number. What portion can you give me a ballpark . I will provide it to you i just dont have it at my fingertips. Is at half . I dont think its half. A quarter . I think our projections indicated that it would be more in the range of 1520 would be it would likely be able to do this. So after Congress Mandated a plan, after wait a minute. We did in 2008. Its written in the statute it says is also statute that a countervailing provision in the statute says we cannot do certain things that are not economically feasible also the analysis i did im sorry. Im sorry, director watt, 33,000, got to the people he could do with justice to both statutes. Four years, for years people lost their homes because fhfa would not enforce the part of the bill that says give some relief to homeowners. And study after study showed that it was economically feasible to do that, and instead millions of people lost their home. Sanded, thats just not true now. What we didnt do was principal reduction but there are millions and millions of people that we provided relief for whose homes were in jeopardy. So to say that we havent done anything in that space, just because we, we did a modest principal reduction program, its just not true. Well, but you didnt do the principal we did not do the principal reduction and ive explained that to you multiple times in this committee. Its interesting to you did not start out explain it. You started out saying you would do it. I asked you in this hearing room over and over, i asked you originally after confirmation hearing, and that followin follw overstay. You did not say weve already done Something Else did you said you would do principal reduction. I do not believe that, go back a look at the record either at my confirmation hearing or at any point in this hearing come in hearing where we discussed this, that i made that commitment to you. I said i would look at it, i would do it in accordance with the statute, and thats exactly what i had done. Now you are down to a few thousand people. After the crisis, the money just flew out the door for the banks, billions and billions of dollars as fast as people could sign their check. But money for people, many of whom who had been ripped off by the same banks, it was just one message of delay and no, and we have to balance is other thing out, handwringing about moral hazard, excuses, not speedy i certainly hope youre not blaming me for that. I didnt create that situation. I tried to stop when i was a member of the house by getting people to quit making loans to people who could not afford to repay them. I mean, i was the original author of the bill. So i dont know, i agree that all of those things have taken place, but to make a sound like, for some reason i am responsible for that, i think is unfair and untrue and unjust. The people who preceded you certainly share the blame. They did nothing. But when you came incom intervin driving this bus since 2013 at the principal reduction by your own numbers at best, a few thousand people have gotten help. I think that is shameful. We need to move on. I would let this go on a bit subject you can get it out, but it out. Now it is senator reeds turn. Senator reid. Thank you, mr. Chairman. Director, in your testimony you state, adequate, like any Business Enterprise need some kind of buffer to shield against shortterm operating losses. In fact, it is especially irresponsible for the enterprise is not to have such a limited buffer because a lost could result in additional taxpayer support and reduce the fixed on a commitment the Treasury Department is made to support the enterprise. By additional contact for support what if using a joint agreement with the taxpayer a lot, is that accurate . Well, theres that risk that it could additional draws to be misinterpreted, and we have to try to guess at risk, yes. In fact, what you want to do is have a buffer in your organization so that you can respond to changing conditions in the market . Thats correct it and not even changing editions in the market. We monitor closely changing conditions in the market. These are noncredit related factors that are driving losses sometimes that have nothing to do with whether we are responsible or not. They are basically accounting, the way you have to account for things and the timing of the accounting process. So its really not even about losses. Its more about accounting things. Now, if tax reform were done, depending on the extent of the Corporate Tax reduction, there would be a dramatic impact. We can calculate that so that would be one of the factors that we would be monitoring regularly to see whats happening in that space. But this is a risk that i just, i do want to make it sound like it is a likely thing to happen, because i think that could be misinterpreted, but as conservator or we dont have the luxury of assuming that risk. You were not here only what you see example of when i got the notice that the airbag on my car needed to be replaced. And everybody was telling me no, thats not a problem, you are not going to have but i was the responsible party in my family, and now i am at the responsible party. I am driving these cars until Congress Changes the cars that im driving, i have to drive these cars and have to make them safe and guard against those kind of even remote risks that we have. I thank you. There was a discussion obviously of the principal reduction, but there are a number of the loans, im told 59,000 nonperforming loans, which fannie and freddie have sold to the private sector and subject to some type of either remediation or some efforts. Could you tell us what youve done to improve the outcomes . I know principal reduction is one but are the other things you done . Sideways senator warren was still here to hear this. One of the reasons so i wish senator warren one of the reasons was the private sector who buys these loans have substantially more flexibility than fannie and freddie has statutorily to do principal reduction. And its part of the waterfall in the nonperforming loan sales program. They are required to consider that as an option if you would improve the ability of borrowers to perform on their loans and get those loans reinstated at some reduced Interest Rate for longerterm or reduced principal amount. All of those things in the nonperforming loan requirements that we have adopted. We couldnt do any more than we did as fannie and freddie, but we could transfer the loans to the private sector and they have substantially more flexibility. That was one of the bases of which we did that. Justifiable. We get, all of us get feedback from borrowers that they havent been helped. Can you and i assume you have sort of some metrics about the different types of measures that a been taken. Again as you describe a lot of it is within the purview of the banks or the holders of the note because they have more flexibility. But he didnt give us a complete her picture i think that would help us in terms of if its not principal reduction it could be interest reduction, it could be, but the ultimate number is how many people are still in their homes and can stay in their homes, even though theyve had thats the objective. We do keep metrics on all of those things because they are required to report the buyers of the nonperforming loans are required to report to us on the outcomes. Because there are requirements that they assume when they purchased the loans, and the only way we can monitor compliance is to know what the actual performance is. And their results are substantially better than the results that we wouldve gotten hadley maintained those nonperforming loans on the books of fannie and freddie. I think that could be helpful. You may not keep this metric and a dont require a response if you have data that shows what happens when they foreclose, because if theres an incentive to foreclose because you can celtic saxon property at a much higher price i think we have removed that incentive but yes, we can provide that. Thanthank you, director. Thank you very much. Thank you, mr. Chairman. Director watt, thats the end of the questions. You have been here essentially two hours and given us your time and responded openly and honestly to these questions. Did you want to say anything else . Thank you, director. Before we wrap it up let me just say to all senator scott will have seven days and that there will be additional questions in writing that i asked you to respond to probably, director watt, one of which is what ive asked about the legal justification for believing that you unilaterally can issue dividends. With that i again want to thank you. We are obviously heavily interested in and engage in this issue, and we will continue to work with you as we move for to develop the best housing policy we can develop for this country. Thank you, director watt. This hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]