Edward DeMarco the official overseer of the massive amount of mortgages help by Fannie Mae and Freddie Mac has gone against the White House and more than 100 members of Congress for the second time by formally rejecting a plan use bank bailout funds to write down principal balances for underwater homeowners
The latest in this long lasting feud, Edward DeMarco, head of the Federal Housing Finance Agency, said Tuesday that offering relief to homeowners with bloated mortgages could encourage more people to default. In the agency’s newest analysis defended DeMarco’s assertion that the White House plan would not be enough to stop most of the foreclosures and wont be cost-effective use of taxpayer funds.
“The anticipated benefits do not outweigh the costs and risks,” DeMarco said in a letter explaining his decision.
Tim Geithner Treasury Secretary with out hesitation shot back, urging DeMarco to reconsider his oppostion. “I do not believe it is the best decision for the country,” Geithner told DeMarco in a letter. The White House plan would “provide much needed help to a significant number of troubled homeowners, help repair the nation’s housing market and result in a net benefit to taxpayers.”
One of Demarco’s most outspoken critics, Rep. Elijah Cummings, D-Md., said “It is incomprehensible that Mr. DeMarco would reject the chance to save up to a billion dollars in taxpayer funds while helping nearly half a million homeowners stay in their homes,”
The conflict coming from both sides analysing the plan’s impact, how many homeowners would apply for help and whether changing their loans would save them from default. A debate highly influenced by political differences over if the tax’s from the homeowners who keep up with loan payment should be used to help others who are struggling.
As of yet, the Obama administration’s efforts to make lenders write donw underwater mortgages have fell short of expextations. With only a few months till November election, the administration is eager to convince voters that it has made every effort to help ease the pain after the fall of the housing market and the recession the followed.
But Mitt Romney has fired back saying that the government’s efforts has done nothing but prolonged the housing downturn and that the real estate market should have been allowed to hit bottom to rebuild a sustainable recovery.