Nineteen members of the House of
Representatives sent a letter today to President Obama and leaders of both parties
in the House and Senate urging the expansion of assistance to homeowners, some
10.8 million of whom have homes that are underwater, as part of any resolution
of the so-called fiscal cliff.
The letter said in part, "Given the
clear benefits of providing assistance to underwater borrowers, as well as the
significant savings for the American taxpayers, we believe that provisions
expanding such assistance should be part of any deal to resolve the fiscal
cliff. At a minimum, such legislation
should require that Fannie Mae and Freddie Mac offer principal reduction loan
modifications to borrowers who are net present value positive."
One of the letter's signers, Elijah
Cummings (D-MD) has been a frequent critic of the Federal Housing Finance
Agency's (FHFA) stance toward principal reduction. FHFA, conservator of Fannie Mae and Freddie
Mac, has refused to permit the two GSEs to include principal reduction in loan
modification proposals. Cummings has
engaged in frequent contentious exchanges on the issue with FHFA's Acting
Director Edward J. DeMarco.
The letter references a July study
conducted by FHFA that showed that principal reduction modifications through the Making Home Affordable program if
made available to Freddie and Fannie's borrowers could help as many as a half
million homeowners and save the GSEs up to $3.6 billion and taxpayers as much
as $1 billion.
office said today's letter is consistent with a proposal presented to Congress by the Obama Administration on
November 29, 2012, which would avert the fiscal cliff by raising $1.6 trillion
in revenues over the next ten years and investing $50 billion in stimulus
spending to continue the economic recovery, including provisions specifically
related to assisting struggling homeowners and addressing the nationwide
In addition to the President the letter was sent to House Speaker John
Boehner, House Minority Leader Nancy Pelosi and Majority Leader Eric Cantor,
and Senate Majority and Minority Leaders Harry Reid and Mitch McConnell. Cummings was joined in signing the letter by Reps.
David Cicilline, Mike Thompson, John Lewis, Brad Miller, Keith Ellison, Zoe
Lofgren, Raul Grijalva, Mike Honda, George Miller, John Tierney, Barbara Lee,
Mel Watt, Jan Schakowsky, Barney Frank, Laura Richardson, Lynn Woolsey, Marcia
Fudge, and Ed Towns.