AG Coakley Calls for New Leadership at Fannie Mae and Freddie Mac
Call for New Leadership Made One Day After Letter Demanding Fannie Mae and Freddie Mac Comply with State Law and Provide Principal Loan Reductions
BOSTON – Stating that Fannie Mae and Freddie Mac have been an “obstacle to progress” for Massachusetts homeowners and our economic recovery, Attorney General Martha Coakley called today for a new, permanent director of the Federal Housing Finance Agency (FHFA) to replace Acting Director Edward DeMarco. FHFA oversees government mortgage sponsored mortgage giants Fannie Mae and Freddie Mac.
The Attorney General’s remarks were delivered to attendees of the Citizens’ Housing and Planning Association’s (CHAPA) statewide housing foreclosure counselor training just a few days after the one-year anniversary of the $25 billion national settlement over unlawful foreclosures.
AG Coakley has repeatedly called on Fannie and Freddie to engage in principal write downs of mortgages when it is commercially reasonable to both parties, as is now being done by the major banks that entered into the national settlement. Fannie and Freddie thus far have refused to adopt that practice. In addition, in a letter sent Monday, AG Coakley called out FHFA for its stated refusal to comply with a new Massachusetts law aimed at reducing foreclosures and stabilizing the housing market.
“The policies of Fannie Mae and Freddie Mac have been a roadblock to progress as we work to recover from this foreclosure crisis,” AG Coakley said. “New leadership and new ideas at the top of Fannie and Freddie is the only way to really fix this economic mess and to make sure homeowners are getting the relief they deserve.”
In her remarks, AG Coakley addressed the problems at Fannie Mae and Freddie Mac which own more than 60 percent of mortgages nationwide but have, under DeMarco’s leadership of FHFA, refused to engage in principal write downs.
The national settlement announced on Feb. 9, 2012, involving the nation’s five largest mortgage servicers and their connection with unlawful foreclosures and loan servicing, brought $318 million in relief to Massachusetts borrowers, including a direct payment of more than $44.5 million to the Commonwealth, used in part to establish the AG’s first-in-the-nation HomeCorps program and offer other grants aimed at helping to mitigate the impact of the foreclosure crisis.
In her remarks, AG Coakley highlighted the successes of HomeCorps including its hotline that was first launched last April and continues to receive around 70 calls a day with questions from distressed borrowers in Massachusetts. Some homeowners call with a foreclosure date just weeks or days away.
Since its inception, HomeCorps has prevented 427 foreclosure auctions creating an opportunity for the homeowner to negotiate a reasonable loan modification with affordable payments. The AG’s HomeCorps loan modification specialists have helped resolve more than 4,600 cases and achieved more than 1,100 permanent loan modifications, including more than $13 million in principal reduction relief for borrowers.
Tomorrow, AG Coakley will participate in a roundtable discussion regarding foreclosure prevention efforts with Lowell Mayor Patrick Murphy, City Manager Bernard Lynch and housing and foreclosure prevention specialists from Lowell and the surrounding region at Lowell City Hall. In December, the AG’s Office opened a regional HomeCorps office at the John F. Kennedy Civic Center in Lowell.