This week, Rep. Hansen Clarke called on President Barack Obama to appoint a permanent director of the Federal Housing Finance Agency (FHFA) to replace Acting Director Edward J. DeMarco. On Tuesday, Mr. DeMarco took steps to prevent any principal forgiveness on mortgages backed by Fannie Mae (FNMA) and Freddie Mac (FMCC). Such debt relief initiatives are considered indispensable to Obama Administration efforts to keep hundreds of thousands of struggling families in their homes.
"These principal reductions are essential to rebuilding Americans' purchasing power and jumpstarting the economy," said Rep. Clarke. "It's outrageous that hardworking homeowners with underwater mortgages must wait so long for help."
The FHFA itself recently concluded that up to half a million underwater homeowners could benefit from such a principal reduction program and that taxpayers could save up to $1 billion if it were enacted because recipients would be more likely to continue making their mortgage payments. Economists including Nobel Prize-winner Paul Krugman have argued that debt relief for homeowners would mean greater overall revenue for the government, since it would increase the size of the overall economy. This would likely offset any costs associated with principal reductions.
Because Mr. DeMarco is currently an Acting Director, President Obama has full authority to replace him by appointing a permanent director. It is highly unusual for the acting director of an executive branch agency to use his or her position to block a President's economic policy.
"Reducing burdens on homeowners not only helps families stay in their homes, it also protects neighborhoods and saves taxpayer money," said Rep. Clarke. "The Federal Government has bailed out the banks; now it's time to support real economic recovery by standing with struggling homeowners."
Rep. Hansen Clarke, who represents Michigan's 13th Congressional District, is a leader in the fight to protect neighborhoods and keep struggling families in their homes. He introduced H.R. 4848, the Save Our Neighborhoods Act, a bill that would allow many homeowners to stay in their homes by suspending the foreclosure process for up to three years. He has worked directly to prevent or delay proceedings against Metro Detroit residents, including Jennifer Britt, a single mother who faced ever-increasing monthly payments that eliminated her savings before Fannie Mae threatened eviction.