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    FHFA Joint AG Letter

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    DinSFLA
    This letter from 9 state attorneys general urges the appointment of new permanent leadership at the Federal Housing Finance Agency. It notes that under the current acting director, Fannie Mae and Freddie Mac have refused to adopt policies allowing principal forgiveness and forbearance, which stands as a major impediment to addressing the foreclosure crisis. The letter argues that principal write-downs as part of loan modifications often provide significant benefits by helping more families avoid unnecessary foreclosure and making the loan portfolio more profitable than defaulted loans. They request new leadership be named to FHFA to allow policies comprehensively addressing the foreclosure crisis.

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    FHFA Joint AG Letter

    Uploaded by

    DinSFLA
    172 views3 pages
    This letter from 9 state attorneys general urges the appointment of new permanent leadership at the Federal Housing Finance Agency. It notes that under the current acting director, Fannie Mae and Freddie Mac have refused to adopt policies allowing principal forgiveness and forbearance, which stands as a major impediment to addressing the foreclosure crisis. The letter argues that principal write-downs as part of loan modifications often provide significant benefits by helping more families avoid unnecessary foreclosure and making the loan portfolio more profitable than defaulted loans. They request new leadership be named to FHFA to allow policies comprehensively addressing the foreclosure crisis.

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    This letter from 9 state attorneys general urges the appointment of new permanent leadership at the Federal Housing Finance Agency. It notes that under the current acting director, Fannie Mae and Freddie Mac have refused to adopt policies allowing principal forgiveness and forbearance, which stands as a major impediment to addressing the foreclosure crisis. The letter argues that principal write-downs as part of loan modifications often provide significant benefits by helping more families avoid unnecessary foreclosure and making the loan portfolio more profitable than defaulted loans. They request new leadership be named to FHFA to allow policies comprehensively addressing the foreclosure crisis.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    172 views3 pages

    FHFA Joint AG Letter

    Uploaded by

    DinSFLA
    This letter from 9 state attorneys general urges the appointment of new permanent leadership at the Federal Housing Finance Agency. It notes that under the current acting director, Fannie Mae and Freddie Mac have refused to adopt policies allowing principal forgiveness and forbearance, which stands as a major impediment to addressing the foreclosure crisis. The letter argues that principal write-downs as part of loan modifications often provide significant benefits by helping more families avoid unnecessary foreclosure and making the loan portfolio more profitable than defaulted loans. They request new leadership be named to FHFA to allow policies comprehensively addressing the foreclosure crisis.

    Copyright:

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    of 3

    March 15, 2013 President Barack Obama The White House 1600 Pennsylvania Avenue NW Washington, D.C.

    20500 The Honorable Harry Reid Senate Majority Leader S-221 U.S. Capitol Washington, D.C. 20510 The Honorable Mitch McConnell Senate Minority Leader S-230 U.S. Capitol Washington, D.C. 20510

    Re:

    New, permanent leadership at Federal Housing Finance Agency

    Dear President Obama, Senate Majority Leader Reid, and Senate Minority Leader McConnell: We write to urge you to expeditiously appoint and approve new, permanent leadership to the Federal Housing Finance Agency (FHFA). As state Attorneys General, we have spent the last several years grappling with the negative impacts of subprime and predatory lending practices and the resulting foreclosure crisis. Through actions against major banks and financial institutions, as well as innovative policy initiatives, we have brought a measure of relief to homeowners and stability to our economy. Loan modifications are a key component of bringing relief to distressed borrowers and spurring our nation's economic recovery. These modifications have generally relied on a netpresent value (NPV) analysis, which serves the dual purposes of helping borrowers remain in their homes and meeting the economic interests of lenders and investors. We have seen firsthand the positive impact of mortgage modifications, often including principal write-downs, on our housing market, economy, and communities. In fact, principal write-downs are a central component of the national settlement, negotiated by the federal government and a bi-partisan group of 49 state attorneys general, that was entered into with five major banks approximately one year ago. When loan modifications employ principal write-downs as necessary to create an affordable modified loan, countless more families will avoid unnecessary foreclosure. Unfortunately, under the leadership of Acting FHFA Director Edward DeMarco, Fannie Mae and Freddie Mac remain an obstacle to progress by refusing to adopt policies that will help maximize

    relief for homeowners. In particular, FHFA's refusal to adjust its policies to allow for principal forgiveness and forbearance stands as a major impediment to addressing the foreclosure crisis. FHFA's continued position that principal forgiveness conflicts with its goal of asset preservation is not supported by reality. The FHFA's current policy actually reduces the

    value of its holdings portfolio. It is far more profitable for any fmancial institution to hold a portfolio of performing $200,000 mortgages that keeps families in their homes than a portfolio of non-performing $250,000 mortgages headed toward default.
    FHFA's recalcitrance remains despite overwhelming evidence that mortgage modifications guided by a net-present value analysis, often including principal write-downs, provide significant dividends. Moreover, FHFA's refusal to consider principal write-downs as part of a comprehensive mortgage modification policy is inconsistent with its combined goal of asset preservation and foreclosure prevention. Simply put, by refusing to allow for principal write-downs that would result in more loan modifications, FHFA stands as a direct impediment to our economic recovery. We have worked tirelessly, along with our federal, state, and local partners to develop a multi-pronged approach to dealing with the foreclosure crisis. Fannie Mae and Freddie Mac should be among our partners in this effort, and leaders in the arena of loan modification best practices. Instead, they have been an obstruction. We believe that until new, permanent leadership is named to FHFA, they will continue to stand as a roadblock to comprehensively addressing the foreclosure crisis. Thank you for your consideration. Cordially,

    Martha Coakley Massachusetts Attorney General

    Eric T. Schneiderman New York Attorney General

    Kamala D. Harris California Attorney General

    Joseph R. "Beau" Biden, III Delaware Attorney General

    entfre---", j
    Lisa Madigan Illinois Attorney General

    Douglas F. Gansler Maryland Attorney General

    Catherine Cortez Masto Nevada Attorney General

    Ellen Rosenblum Oregon Attorney General

    Bob Ferguson Washington Attorney General

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