For Immediate Release - May 01, 2013

AG Coakley Praises President Obama's Proposed Appointment of Congressman Mel Watt as Director of the Federal Housing Finance Agency

BOSTON – Today, Attorney General Martha Coakley issued the following statement praising President Obama for seeking to appoint Congressman Mel Watt as the new director of the Federal Housing Finance Agency:

“For too long, Fannie Mae and Freddie Mac have been a roadblock to progress for millions of middle class families. Today, President Obama is seeking a much-needed new direction at Fannie and Freddie that will benefit our nation’s homeowners and speed our economic recovery. Congress should choose progress over obstruction and act immediately to approve the President’s nominee.”

BACKGROUND:

In February, while addressing the Citizens’ Housing and Planning Association (CHAPA), AG Coakley called for a new, permanent director of the FHFA.

In March, AG Coakley called Fannie Mae and Freddie Mac a “direct impediment to our economic recovery” by the continued refusal to allow principal reductions for struggling homeowners.  AG Coakley and New York Attorney General Eric Schneiderman were joined by seven other attorneys general in a letter to the President calling for a new permanent leader to replace Edward DeMarco as Director of the Federal Housing Finance Agency (FHFA).

The attorneys general argued that principal mark-downs are a central component of the national settlement, and continue to bring meaningful relief to distressed borrowers, spurring our nation’s economic recovery. In general, all loan modifications rely on a net-present value (NPV) analysis that serves the dual purposes of helping borrowers remain in their homes and meeting the economic interests of lenders and investors. The positive impact of mortgage modifications which often include principal write-downs continues to be felt on the housing market, economy, and our local communities.

FHFA's continued position that principal forgiveness conflicts with its goal of asset preservation is “not supported by reality,” the attorneys general assert in the letter.

In February 2012, AG Coakley urged FHFA to engage in loan modifications guided by a net-present value analysis to help stabilize the housing market and economy. Later in April 2012, AG Coakley and 10 other state attorneys general sent a letter to Director DeMarco seeking relief for homeowners and argued that the failure to implement principal loan forgiveness harms struggling homeowners and investors.

In August 2012, AG Coakley sent a letter to Director DeMarco stating that Fannie Mae and Freddie Mac are required to offer principal reductions as a commercially reasonable tool under the new Massachusetts loan modification statute. The Massachusetts law, signed by Governor Deval Patrick on August 3, 2012, requires creditors to take commercially reasonable steps to avoid foreclosure upon certain mortgage loans.

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