Kamala Harris, California’s state attorney general, is going
to battle yet again against Edward DeMarco, head of the Federal Housing Finance
Agency [FHFA], the government body which oversees the two government-sponsored
agencies - Fannie Mae and Freddie Mac. Riding the coattails of the
recent $25 billion foreclosure settlement between the five biggest
mortgage servicers and their wronged homeowner clientele, Ms. Harris authored a
letter to DeMarco requesting he halt foreclosure proceedings in California
until the FHFA "has completed a thorough, transparent analysis of
whether principal reduction is in the best interest of struggling homeowners as
well as taxpayers." Having failed to get Fannie Mae and Freddie Mac
to participate in helping struggling homeowners in California via the
foreclosure settlement and the principal reduction stipulation, I am
hard-pressed to believe DeMarco will
agree to the suspension of foreclosures altogether and leave billions of
dollars on the table. Last month alone, Los Angeles County recorded six
billion in foreclosure sales. And with over half of the loans in
California being owned by the GSEs, Ms. Harris may be barking up the wrong
tree.
Although
our state attorney general may be fighting a losing battle on this particular
issue, she is at the very least adding fuel to the existing fire surrounding
the FHFA director Edward DeMarco. With other state attorneys general
voicing their opinions of disdain towards the GSEs head, especially in regards
to his unwillingness to compromise on his refusal of offering principal
reductions to struggling homeowners, Edward DeMarco may not be able to dodge
these bullets forever. Public outcries like Ms. Harris’ letter may not be
effective in their own right, but the cumulative effect of such inquiries may
eventually break the camel’s back. Only time will tell…
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