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.
Cumming's 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 foreclosure crisis.
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.