Tuesday, February 28, 2012

California’s state attorney General Fires Another Bullet at FHFA Director

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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