The solution is Principal Reduction, which would reduce mortgages to their fair market value.
The primary obstacle is Edward DeMarco, the Acting Director of the Federal Housing Finance Agency, who, as Isaiah Poole explains, "is a Bush administration holdover who is still in his position because Republicans in the Senate blocked the person President Obama nominated as his replacement."
DeMarco remains stubbornly resistant in the face of increasing demands for him to help end the housing crisis by allowing principal to be reduced for struggling homeowners with Fannie Mae and Freddie Mac mortgages.
The Congressional Progressive Caucus has urged DeMarco to act or be removed, backed up by the new America Underwater partnership between progressive grassroots groups Rebuild the Dream and the New Bottom Line.
But it isn't only progressives. As Bill Scher writes, "Mortgage Bankers Association CEO David Stevens last week lent his support for principal reductions, saying they would put "cash flow into the hands of families." He joins other Wall Street voices such as famed hedge fund manager Greg Lippman, the world's largest bond fund, Pimco and the mortgage analysts at Amherst Securities."
An article in The Atlantic authored by analysts from the Center for American Progress noted the "growing consensus among economists, investors, academics, and consumer advocates that more 'principal reduction' -- writing off a portion of a mortgage that exceeds a home's value in exchange for a higher likelihood of repayment -- can help avoid another wave of costly and economy-crushing foreclosures." As they write, that's "good for homeowners and lenders, and because millions of underwater mortgages are controlled by the government, it's also good public policy."
Still DeMarco won't budge. And since, he won't move, it is time for the President to remove him and use a recess appointment to replace him. As Robert Borosage urges:
The President has the power to right this wrong. He has used recess appointments before to stand up to obstructionist conservatives. Now he needs to act again. And he needs to hear from us. It is time to move.Click here to tell President Obama: Fire Edward DeMarco and replace him with a recess appointment.