Decision by FHFA to Forbid Principal Reductions Leaves Hundreds of Thousands of Families Facing Foreclosure and Could Cost Up to $1 Billion in Potential Savings
Washington, DC – August 1, 2012 – (RealEstateRama) — Congressman John Tierney today released the following statement in response to the decision by Federal Housing Finance Agency Acting Director Ed DeMarco to forbid Fannie Mae and Freddie Mac from reducing principal on mortgages even though utilizing principal reductions could save Fannie Mae and Freddie Mac as much as $3.6 billion, save U.S. taxpayers up to $1 billion on a net basis, and help up to 497,000 homeowners. The Department of the Treasury also issued a letter today calling on FHFA Acting Director Ed DeMarco to reconsider his decision.
“Mr. DeMarco’s decision could cost the American people up to $1 billion dollars in savings and leave hundreds a thousands of homeowners and families without a path to stay in their homes. Whether guided by politics or extreme ideology, Mr. DeMarco’s response on this issue continues to be irresponsible and ill-advised,” Congressman Tierney said.
Background:
On February 8, 2012, Cummings and Tierney sent a letter to DeMarco asserting that ideological reasons and political backlash were motivating his decision to refuse principal reduction programs after receiving the agency’s analyses that principal reduction would save taxpayers billions of dollars. The agency’s findings directly contradicted DeMarco’s previous testimony before the Oversight Committee.
On March 23, and May 1, 2012, Cummings and Tierney sent letters to DeMarco requesting further data from the analyses used to justify his position on principal reduction after receiving internal documents that showed that Fannie Mae concluded as far back as 2009 that reducing principal on mortgages in its portfolio could save taxpayers money by preventing foreclosures.
