Today, hundreds of community organizations called on President Obama to make a recess appointment to the Federal Housing Finance Agency (FHFA). FHFA is currently led by an Acting Director, Ed DeMarco, who has refused to allow Fannie Mae and Freddie Mac, which hold the majority of the mortgages in the country, to participate in a key administration principal reduction program.
“The administration saying that their hands are tied on FHFA, when the President has the ability to name an FHFA Director through a recess appointment, is akin to telling someone 'my dog ate my homework,'" said National Community Reinvestment Coalition President and CEO John Taylor. "It’s time for the President to step up and use his power to make a recess appointment to deliver much needed relief to American homeowners, who are still paying the price for a housing market which crashed because of malfeasant industry practices, not through any fault of their own."
“Despite the Obama administration’s continued efforts to work with FHFA Acting Director DeMarco, he has shown that he will not budge on principal reductions at Fannie Mae and Freddie Mac. Doing principal reductions at the GSEs is in all of our best interests, as it would not only help homeowners, and save taxpayers money, but also benefit the housing market and our flagging economy. This is too important an issue to continue to leave the director position at FHFA unfilled.”
“It’s time to have an FHFA director who will take action,” said Dory Rand, president of Woodstock Institute and NCRC board member. “Over 400,000 homeowners in the Chicago region owe more than their homes are worth, which continues to impede our region’s housing recovery.”
DeMarco recently announced that he will not allow Fannie Mae and Freddie Mac to participate in the Home Affordable Refinance Program Principal Reduction Alternative (HAMP-PRA). FHFA’s analysis shows that allowing the GSEs to participate in HAMP-PRA could benefit up to 500,000 homeowners nationwide, save $3.6 billion for Fannie Mae and Freddie Mac, and $1 billion for taxpayers.
“Our clients who get a principal reduction have a better chance of succeeding in a sustainable mortgage than those who don't,” said Bobbi Ball, executive director of Partners in Community Building Inc. “At the same time, many people are looking for work or are underemployed in a home that has no equity and cannot qualify for a traditional refinance. DeMarco’s decision to block loan modifications with principal reductions is unacceptable.”