Ex-FHFA head calls for “divorce” between public and private sector in housing

James Lockhart, who stepped down as head of the Federal Housing
Finance Agency in August, advocated more aggressive mortgage
modifications in a Tuesday CNBC
interview, arguing that principal reductions are necessary in addition
to lowering monthly payments. Lockhart, who is now vice chairman of WL
Ross & Co., the distressed investment firm run by billionaire Wilbur
Ross, said he predicts another spike in foreclosures this year, as
well as an increase in strategic defaults because “the stigma is not
there anymore.” He added that “the odd marriage” between the public
and private sector in the housing market “isn’t working and we need a
divorce.”