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An ongoing drama is unfolding: a David versus Goliath tale of sorts that pits a Riverside, Calif., family fighting to stay in their home against the weight of that elephant, otherwise known as "Freddie."
March 6 -
Edward DeMarco, the regulator in charge of supervising Fannie Mae and Freddie Mac, was once again in the hot seat as lawmakers pressed him on his reluctance to forgive underwater borrower's debt.
February 28 -
Now that the agency overseeing Fannie Mae and Freddie Mac has revealed the reasoning behind its stubborn opposition to mortgage principal reduction, the problems with its argument are clear.
February 27
WASHINGTON — Several liberal House members pressed President Obama on Wednesday to fire the acting head of the Federal Housing Finance Agency, Edward DeMarco, if he continues to oppose writing down underwater mortgages.
"My constituents need action now," said Rep. Raul Grijalva, who co-chairs the Congressional Progressive Caucus. "Mr. DeMarco needs to take action immediately."
Rep. Yvette Clarke, a New York Democrat, said, "Edward DeMarco, get it done or get out of the way."
Their calls came during a Capitol Hill press conference, where a group of housing activists went even further, arguing that DeMarco has waited too long to deliver relief to struggling homeowners, and he ought to be fired immediately.
The activists, organized as part of a group called The New Bottom Line that is pushing for principal reductions, said they planned to go to the FHFA's headquarters with 85,000 signatures calling for DeMarco to be fired.
Some of the activists carried signs that read, "They get rich. We get foreclosed. They get a bailout. We get mad."
Rep. Jerrold Nadler, a New York Democrat, agreed with the activists' assessment that DeMarco should not be given more time.
"He ought to be fired. He must be fired," Nadler said.
Nadler acknowledged that if Obama did drop the axe, the president's choice for the next head of the agency would be unlikely to win Senate confirmation. But he said that Obama should continue firing acting heads of the agency until he finds someone who is willing to write down the principal of underwater homeowners.
"Fire DeMarco," Nadler said. "If his deputy won't do it, fire the deputy."
Congressional Democrats have been expressing their displeasure with DeMarco's opposition to principal reductions for more than a year, but Wednesday's press conference signaled that the pressure will likely increase in an election year.
DeMarco, whose agency has broad authority over decisions at Fannie Mae and Freddie Mac, has argued that principal reductions will not provide the best deal for U.S. taxpayers.
He prefers loan modifications where the borrower's interest rate is reduced, and payments on some of the outstanding loan principal are deferred, but the homeowner remains on the hook for the full amount of principal.
But DeMarco has vowed to continue to assess the situation, and his agency said recently that it is studying whether it will make sense to grant principal reductions under a new Obama administration initiative that increases the financial incentive to do so.
Among the Democratic representatives at Wednesday's press conference were Reps. Keith Ellison, John Conyers, Luis Gutierrez, Jan Schakowsky, Sheila Jackson Lee, and David Cicilline.
Rep. Brad Miller, a North Carolina Democrat, offered a more moderate take than some of his colleagues. He declined to call for DeMarco's ouster but stated that a targeted principal reduction program would offer the best deal to U.S. taxpayers who are on the hook for losses at Fannie and Freddie.
"The best way to help homeowners is to reduce the principal in a smart way," Miller said.
But even if the FHFA were to agree to a targeted program of principal reductions, it seems unlikely to satisfy the activists who spoke on Wednesday.
Their new website, americaunderwater.org, states, "We need a minimum of $300 billion in principal reduction to help homeowners and rebuild the economy."
