IN CALLING FOR MORTGAGE PRINCIPAL WRITEDOWNS, GUTIERREZ SUGGESTS ACTING FHFA DIRECTOR STEP ASIDE

Statement at Press Conference Convened by Congressional Progressive Caucus

March 7, 2012

Media Contact: Douglas Rivlin (202) 225-8203

FOR IMMEDIATE RELEASE

(Washington, DC) -- Today, Rep. Luis V. Gutierrez, Ranking Democrat on the Housing, Insurance, and Community Opportunity Subcommittee of Financial Services and a member of the Congressional Progressive Caucus (CPC), joined advocates and Members of the CPC at a Capitol Hill press conference calling on Edward DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, to write down principal amounts for struggling homeowners.   The following is a statement by Rep. Luis V. Gutierrez (D-IL):

I want to thank my colleagues Keith Ellison and Raul Grijalva for organizing this press conference as well as my other colleagues and all of you for coming.

As a homeowner in the City of Chicago, which has been hard hit by foreclosures and of course, as the Ranking Member on the Housing, Insurance, and Community Opportunity Subcommittee, I track housing issues very closely and applaud my colleagues in the Progressive Caucus for calling on the Federal Home Finance Administration to write down principal for homeowners in danger of losing their homes.

From a good government, a good business, and a good neighbor perspective, it makes sense for the FHFA to write down principal because it will minimize taxpayer exposure while keeping those same taxpayers in their homes. And we know that businesses in the private sector are already showing results with shared appreciation programs.

Ocwen Financial Corporation, among others, has seen very low default rates by judiciously writing down principal amounts and FHFA will find that, if they do the same, it will have a ripple effect across the economy. 

The goal should be to keep more people in their homes and keep taxpayers from picking up more of the cost in the long-run.  That is the way we restore safety and stability to our neighborhoods.  That is the way we create the conditions for better schools, thriving neighborhood businesses, and vibrant cities. 

Writing down principal is one way government involvement in housing markets can help taxpayers, lenders and borrowers at the same time.

So I say to Edward DeMarco, Acting Director at the FHFA: If you can't find a way to meet the needs of taxpayers and deserving homeowners, perhaps you should resign.  We are facing serious problems in the housing market and we simply can't use someone at FHFA who plugs his ears and refuses try for workable solutions.  We do not need you acting as Director if you are not using your position to act like you are helping people keep their homes.

I know that there are many, many more Representatives and Senators who will back you up and support you if you step forward and help FHFA be a leader and not a follower on writing down principal.
  

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