Key voices on Capitol Hill today echoed the message that underwater homeowners need the principal on their mortgages reduced, and that the government official responsible for keeping that from happening should either change his position or step down from his post.
Principal reduction is the the critical fight going on in the housing front right now, and members of the Congressional Progressive Caucus, the financial reform group New Bottom Line, and other grassroots organizations gathered outside the Capitol to challenge the head of the Federal Housing Finance Agency, Edward DeMarco: Move on principal reduction or be removed.
Their call echoes our own campaign calling on DeMarco to get out of the way of the relief homeowners need, which has generated several thousand messages that have done directly to DeMarco’s office. Click here to send your message.
DeMarco’s opposition on this issue affects nearly 12 million Americans in homes financed through Fannie Mae or Freddie Mac who owe more on their mortgage than their homes are worth. One of them is Rose Gudiel, who was at the Capitol representing the Alliance of Californians for Community Empowerment. Facing foreclosure, she resorted to organizing a demonstration and was arrested—along with her aging, disabled mother—before she was granted a loan modification by her bank. However, as she described it, this modification was merely a “Band-Aid, as my house is still under water and it will continue to be under water.”
On Tuesday, President Obama announced a program designed to help homeowners refinance their homes at lower interest rates. That is a helpful step for many homeowners, but for the millions of homeowners who share Gudiel’s situation, that only solves a small part of the problem. Today’s housing market has seen prices fall an astonishing 33 percent since 2008, more than the 31 percent price decrease that occurred during the Great Depression.
“The families that are here today represent millions and millions of home owners who just can’t wait any longer,” said Rep. Jan Schakowsky, D-Calif. “They deserve aggressive action from the FHFA to make sure their mortgages are affordable. There have been dozens of members of Congress who have met repeatedly with Ed DeMarco, the head of FHFA, including our resident expert, Congressman Brad Miller, and each time he has not reacted as we have asked him; he has done nothing and he has been a thorn in the side of the president and Congress.”
“Right now in Arizona 48 percent of the homeowners—nearly half—are underwater and facing the prospect of losing their homes, facing the prospect of foreclosure,” said Rep. Raul Grijalva, D-Ariz., co-chairman of the Congressional Progressive Caucus. “Meanwhile the Federal Housing Finance Agency has failed to require those servicers, those mortgages, not only in Arizona but across the country to reduce that principal.”
Schakowsky said that principal reduction would likely benefit homeowners more than any other weapon in the FHFA’s arsenal, and with financial incentives now made available to lenders through the Treasury Department, “FHFA has more reason than ever to take immediate action. And so we are simply tired of waiting for answers for our communities and for our constituents.”
DeMarco is a Bush administration holdover who is still in his position because Republicans in the Senate blocked the person President Obama nominated as his replacement. Some progressive activists have been urging President Obama to make a recess appointment in defiance of Congress, as he did in choosing the head of the Consumer Financial Protection Agency and filling vacancies at the National Labor Relations Board.
“It is time now for the president just to say: ‘Edward DeMarco, you are fired,’” Schakowsky said.
Assistance from Farbod Khadkhoda