To: President Donald Trump, The United States House of Representatives, and The United States Senate
Save Our Homes & Stop the Foreclosures
Edward DeMarco, acting director of the Federal Housing Finance Agency, in an agency analysis found that writing down the loan value of underwater Fannie Mae and Freddie Mac mortgages could lower the foreclosure rate, and save a lot of money for the mortgage giants. But the analysis did not incorporate potential costs including the risk that otherwise current homeowners might "strategically default" so they could take advantage of the savings. So it's okay to pull all stops and deregulate federally-backed institutions to knowingly make bad financial moves that end in strategic default, but we can't make this same potential scenario available to the average citizen?!
Why is this important?
Some 11 million homeowners are currently underwater in their mortgages. Reducing their principal balances could enable them to avoid foreclosure, thus propping up house prices and boosting economic growth. Advocates say Fannie and Freddie could facilitate writedowns at practically no cost to taxpayers, because the entities are already on the hook for the risk of default anyway — and because a growing economy reduces that risk.