Is Edward DeMarco the reason behind our lack of a real, meaningful economic recovery?
(TheNicheReport.com) -- Mr. DeMarco has come under fire for the position he has adopted with regard to the $25 billion settlement agreement signed earlier this year between Ally Financial, Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and the attorney generals of several states.
Those five banks agreed to settle claims of resorting to nefarious practices in order to railroad and fast-track distressed mortgage borrowers into foreclosures and evictions. As part of the settlement agreement, the five mortgage lenders agreed to review mortgages that are currently worth more than the property they are attached to as liens. These so-called "underwater" mortgages are seen as major obstacles to the overall American economic recovery effort, and the five banks have agreed to help borrowers stay afloat by reducing the principal mortgage amount due.
This is a practice that DeMarco does not want Fannie and Freddie to engage in. Mr. DeMarco's Rationale The avalanche of foreclosures that has plagued the housing market in the United States is seen as one of the major hindrances to economic recovery. Writing off the principal amounts of underwater mortgages could bring much-needed stability to the housing market by staving off the number of foreclosures, something that quite a few real estate analysts and economists consider could bring stability. When it comes to writing off troubled mortgages guaranteed by Fannie Mae and Freddie Mac,
Mr. DeMarco has stated that the FHFA's mission as conservator of the two GSEs is to make sure that their assets remain strong. By reducing principal amounts on mortgage loans held by Fannie and Freddie, the portfolios of the GSEs will diminish in value and taxpayers would eventually absorb the loss. Instead of write-offs, DeMarco is in favor of forbearance, a loss mitigation strategy that extends the life of the loan and lowers the interest rate payments. Representatives of Congress are not in agreement with DeMarco's position on the matter and are calling for his removal. Activists and lawmakers are coming together with petitions sent directly to the White House. Even the Secretary of Housing and Urban Development (HUD) is not pleased with DeMarco. The White House has not yet commented on the matter.