CLEVELAND, OH – Ed DeMarco has used shortsighted analysis and myopic perspective in his refusal to allow Fannie Mae and Freddie Mac to correct principal mortgage balances for millions of underwater homeowners.
“Once again Ed DeMarco is thumbing his nose at the vast number of economists, industry analysts, housing advocates and underwater homeowners who have made the economic case for principal correction,“ said Mark Seifert, Executive Director of Empowering and Strengthening Ohio’s People.
As acting Director of the Federal Housing Finance Administration, DeMarco has a duty to consider not only the dollars and cents effect of principal correction on Fannie Mae and Freddie Mac assets, but also the impact of FHFA policies on the overall housing market. DeMarco’s claim that the costs of principal correction outweigh the benefits is simply false. Any short term gains will never outweigh the benefits of righting the housing market with principal correction and putting the nation’s economy and its taxpayers on solid footing for the long term.
Nearly one in three U.S. homeowners is underwater, meaning they owe more on their home than it is worth. By all accounts the approximate $1 trillion dollar in negative equity is severely holding back a recovery in the housing market. Moreover, underwater homeowners are nearly twice as likely to face foreclosure as those with some home equity. This looming threat is the last thing we need as the second quarter of this year has already seen a spike in foreclosure filings across much of the nation.
The mostly rehashed discussion in DeMarco’s letter to Congress and supporting documents is full of references to borrowers, strategic defaulters, Fannie, Freddie, investors, servicers and more, discussing the upsides and downsides for parts of the country. Yet FHFA never seems to consider what’s right for the long suffering, debt-oppressed American people.
DeMarco has the opportunity to be more than an accountant. He has the chance to be a real leader by helping repair the damage of the housing crisis and restore a healthy, stable and accessible housing market for all Americans. Instead his failure to act leaves the housing market stalled and homeowners shackled to debt for which there is no underlying value.
ESOP urges DeMarco to reconsider his refusal to correct mortgage principal and the continuing harm caused by his inaction.