Federal Housing Finance Agency Director Mel Watt so far is holding the line on Fannie Mae’s and Freddie Mac’s blanket prohibition on principal reduction, but mounting pressure from progressives in and out of Congress have industry observers predicting a policy shift soon. Since taking office as the FHFA’s head in January, former Rep. Mel Watt, D-NC, has so far been a disappointment to his former Democrat colleagues and advocates who believed he would reverse the agency’s principal reduction stance set by former Acting Director Edward DeMarco.