December 10, 2013–In response to today’s Senate vote to confirm Representative Mel Watt as the next director of the Federal Housing Finance Agency, Kevin Stein, Associate Director of the California Reinvestment Coalition, released this statement:
“The California Reinvestment Coalition applauds the confirmation of Representative Mel Watt to head the Federal Housing Finance Agency, the regulator of Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac. For years, California tenants, homeowners and communities suffered because of the policy positions of the outgoing acting director of the FHFA, Ed DeMarco. Mr. DeMarco set policy for how banks and servicers are required to service loans held by Fannie Mae and Freddie Mac, including how to provide assistance to homeowners facing foreclosure. Instead of using this important position to keep more Americans in their homes, he continued policies that greatly worsened the foreclosure crisis.
These policies included:
- Fighting against the enactment of California’s landmark Homeowner Bill of Rights, a law widely applauded for protecting homeowners and which has already been duplicated in Nevada and Minnesota;
- Not maintaining sufficient protections for tenants negatively impacted when the homes they were renting were foreclosed on;
- Refusing to offer favorable principal reduction loan modifications to families struggling to pay their GSE loans;
- Selling foreclosed Fannie and Freddie homes to private investors instead of residents and nonprofits who could have used the homes to promote community stability; and
- Aggressively working against local governments who are considering using tools to stem the foreclosure tide, including eminent domain.
In light of these polices, CRC organized a letter (link to letter) in 2012, which 96 organizations signed, calling on Acting Director Ed DeMarco to either resign or change policies at Fannie Mae and Freddie Mac. CRC is hopeful that FHFA Director Watt will right these, and other, wrongs, and lead the GSEs to finding their way back towards helping all qualified families attain and maintain homeownership, or access much needed affordable housing. We also are pleased Mr. Watt will be in place to ensure that any reform of the GSEs will not leave behind low income tenants, homeowners, and communities.”
Since the beginning of the foreclosure crisis, the California Reinvestment Coalition has conducted an annual survey of housing counselors and nonprofit attorneys about their experiences working with banks and servicers.
In CRC’s 2012 survey, (link to survey) housing counselors and nonprofit attorneys reported:
- 81% reported “mixed or negative” experiences in trying to escalate cases to help homeowners when the loans were held by Fannie or Freddie.
- 66% of counselors rated loans serviced on behalf of GSEs as either “terrible” or “bad” when asked how likely the servicers were to help borrowers save their homes when they thought that outcome was possible.