New York State Attorney General Eric T. Schneiderman published an op-ed in Politico calling on President Obama to replace Edward DeMarco, the acting Director of the Federal Housing Finance Agency (FHFA), which oversees mortgage institutions Fannie Mae and Freddie Mac. Co-authored by Massachusetts Attorney General Martha Coakley, the op-ed notes that Acting Director DeMarco’s refusal to provide relief to struggling homeowners stands in the way of progress toward a full economic recovery, hurting families nationwide. The following are excerpts of the article:
► ON DEMARCO’S REFUSAL TO ALLOW MORTGAGE REDUCTIONS: Under DeMarco’s leadership, Fannie Mae and Freddie Mac have refused to allow principal write-downs for underwater mortgages. At a House Financial Services Committee hearing last week, DeMarco was questioned by Congress and confronted by protesters calling for mortgage principal reduction, but he again refused to change his position. This failed policy is a direct impediment to our economic recovery and stands in way of our efforts to provide much needed assistance to homeowners across the country.
► ON HELPING DISTRESSED HOMEOWNERS: Underwater homeowners are more likely to wind up in foreclosure. Even if they avoid foreclosure, they are saving every penny to try to pay down their debt. They can’t spend at local businesses. They can’t move for a better job, or invest in starting a small business. They are trapped under America’s $628 billion mountain of negative equity. It is in everyone’s interest for lenders to work with distressed homeowners to reduce their debts and keep them in their homes.
► ON THE NATIONAL MORTGAGE SETTLEMENT: Last year, we joined 47 other states in a national mortgage settlement with the five largest mortgage servicing banks, that has delivered billions in relief to homeowners at risk of foreclosure, including over $17 billion in mortgage principal reductions. We are working to get more relief from lenders in the private sector, but these efforts are undercut by DeMarco’s refusal to cooperate. The reality is, more than half of all mortgages in America are owned or guaranteed by Fannie Mae or Freddie Mac.
► ON THE ROLE OF THE FHFA DIRECTOR: Contrary to the findings of his own agency, DeMarco argued that principal reductions would weaken the finances of FHFA and produce a financial loser for taxpayers. These are two separate questions, only one of which is DeMarco’s responsibility. He is responsible for the fiscal health of his agency. FHFA estimated that it would come out ahead by $3.7 billion from the Administration’s plan because of the aid from Treasury. It’s likely that taxpayers as a whole will come out ahead as well. But even if they don’t, if the Administration opts to use public resources to support a policy that prevents foreclosures, stimulates the economy and creates jobs, it’s not the place of an acting agency head to stand in the way.