DeMarco
Harris
WASHINGTON (Legal Newsline) - A coalition of more than 200 civil rights groups last week sent a letter to the head of a federal agency overseeing Fannie Mae and Freddie Mac, asking him to do more to reduce foreclosures and stabilize the housing market.
The Leadership Conference sent its letter to the Federal Housing Finance Agency's Acting Director, Edward DeMarco, Friday.
The FHFA is the agency that manages the two companies following the 2008 financial crisis.
"We've long been frustrated with his resistance to allowing Fannie Mae and Freddie Mac, which hold more than half of all outstanding mortgages, to do more to reduce foreclosures and stabilize the housing market," said Scott Westbrook Simpson, press secretary for The Leadership Conference.
"They must be able to reduce mortgage principal when borrowers owe more than their homes are worth."
Simpson said it was "especially urgent" in the wake of last week's multistate mortgage settlement.
On Thursday, federal officials and 49 state attorneys general announced a $25 billion agreement was reached between them and the five banks -- Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp. -- after months of negotiations.
The settlement is one of the largest civil settlements ever obtained by the nation's attorneys general -- second only to their 1998 settlement with the tobacco companies.
The multistate deal, which only covers those mortgages held by the five banks and not Fannie Mae or Freddie Mac, institutes new protections for homeowners and nationwide reforms to mortgage servicing standards.
It also still leaves the door open for legal remedies for mortgage-related misconduct.
The probe, which began in October 2010 with inquiries into so-called "robosigning" practices, broadened into identifying and addressing additional alleged improper foreclosure practices.
Wade Henderson, president and CEO of The Leadership Conference, along with Nancy Zirkin, its executive vice president, authored the letter to DeMarco.
In it -- in light of the multistate agreement between the banks, attorneys general and federal officials -- they ask that DeMarco meet with them earlier than their Feb. 23 scheduled meeting. In fact, they call it "critical."
"These important developments demand a prompt response by the (Government Sponsored Enterprises) and make our meeting more urgent," they wrote.
"We believe that Fannie Mae and Freddie Mac principal reduction policies must promptly be instituted in order to significantly reduce foreclosures, stabilize the housing finance market, and ultimately reduce taxpayer losses stemming from the takeover of the GSEs."
Henderson and Zirkin said the only way that the settlement will have a "lasting impact" is if all mortgage holders, in particular Fannie Mae and Freddie Mac, work together in a "coordinated fashion."
They said they remain "troubled" by DeMarco's assertions that it is not his agency's responsibility to provide more general support to the housing market.
"To put it simply, given the fact that the GSEs currently hold more than half of all outstanding mortgages, the health of the housing market and the health of the GSEs now go hand in hand," Henderson and Zirkin wrote.
Simpson said late Friday that DeMarco's office denied the coaltion's request to move up its meeting.
"We'll still meet with him on Feb. 23 and, in the meantime, will continue trying to get FHFA to take the right steps for our communities as outlined in the original letter," Simpson said in an email.
This isn't the first time DeMarco has got flack over his agency's lack of involvement in assisting homeowners.
In November, California Attorney General Kamala Harris told DeMarco to "step aside" if he wouldn't help homeowners.
The attorney general, who signed on to the nationwide settlement last week, accused DeMarco of continuing to refuse to lower mortgage loans for troubled homeowners.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com