House Members Urge President, House, and Senate Leaders to Include Mortgage Principal Reduction in Any Fiscal Cliff Deal

House Members Urge President, House, and Senate Leaders to Include Mortgage Principal Reduction in Any Fiscal Cliff Deal

Washington, DC (Dec. 11, 2012)—Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, and 18 other House Members sent a letter to President Obama, House Speaker John Boehner, Democratic Leader Nancy Pelosi, Senate Majority Leader Harry Reid, and Minority Leader Mitch McConnell urging them to expand assistance to homeowners underwater on their mortgages as part of any package to resolve the fiscal cliff.

“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,” the Members wrote.  “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.”

In July, the Federal Housing Finance Agency issued a study showing that offering principal reduction modifications under the Making Home Affordable-Principal Reduction Alternative program to borrowers with loans backed by Fannie Mae and Freddie Mac could help as many as half a million homeowners, save Fannie Mae and Freddie Mac as much as $3.6 billion, and save U.S. taxpayers up to $1 billion.

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 our nation’s fragile economic recovery, including provisions specifically related to assisting struggling homeowners and addressing the nationwide foreclosure crisis.

The following Members signed the letter:  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.

Below is the full letter:

 

December 11, 2012

The President

The White House

1600 Pennsylvania Avenue

Washington, DC 20500

The Honorable Nancy Pelosi

Democratic Leader

U.S. House of Representatives

H-204, The Capitol

Washington, DC 20515

The Honorable Harry Reid

Democratic Leader

U.S. Senate

S-221, The Capitol

Washington, DC 20510

 

The Honorable John Boehner

Speaker

U.S. House of Representatives

H-232, The Capitol

Washington, DC 20515

 

The Honorable Eric Cantor

Republican Leader

U.S. House of Representatives

H-329, The Capitol

Washington, DC 20515

 

The Honorable Mitch McConnell

Republican Leader

U.S. Senate

S-230, The Capitol

Washington, DC 20510

 

Dear Mr. President, Speaker Boehner, and Leaders Cantor, Pelosi, Reid, and McConnell:

We are writing to urge you to include in legislation addressing the so-called “fiscal cliff” provisions that will provide assistance to homeowners who are currently underwater on their mortgages, including provisions that will provide principal reduction modifications to borrowers with loans guaranteed by Fannie Mae and Freddie Mac.

The Board of Governors of the Federal Reserve reports that the decline in home prices following the 2008 financial crisis may have destroyed approximately $7 trillion in household wealth in this nation.  Although the housing market is slowly recovering, Federal Reserve Chairman Ben Bernanke warned in a speech last month that “the housing revival still faces significant obstacles,” and “[t]he degree to which that challenge is met will help determine the strength and sustainability of the economic recovery.”

Among the most serious challenges confronting the housing market and our nation is the number of borrowers who still owe more on their mortgages than their homes are worth.  According to a report released in September by CoreLogic, 10.8 million homes in the United States—22.3% of all mortgaged residential properties—were still underwater at the end of the second quarter of this year.

In July, the Federal Housing Finance Agency (FHFA), the conservator and regulator of Fannie Mae and Freddie Mac, released a study showing that offering principal reduction modifications under the Making Home Affordable-Principal Reduction Alternative program to borrowers with loans backed by Fannie Mae and Freddie Mac could help as many as half a million homeowners and save Fannie Mae and Freddie Mac as much as $3.6 billion.  Such a program was estimated by FHFA to be likely to yield a net savings of up to $1 billion to U.S. taxpayers.

According to Treasury Secretary Timothy Geithner, such a principal reduction program “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.”

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.

Thank you for your consideration of this request.

Sincerely,

 

[Signatories are listed above.]

SOURCE: http://democrats.oversight.house.gov

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4closureFraud.org

Comments
7 Responses to “House Members Urge President, House, and Senate Leaders to Include Mortgage Principal Reduction in Any Fiscal Cliff Deal”
  1. lies is all they tell says:

    all a ploy danelle. its all great we know this. imagine the massess knowing this. it would be mass caos. no one would pay their mortgages. so they have to pretend all the mortgages are ok and squeeze as much money outt as possible

  2. lies is all they tell says:

    sure now???? what about all the foreclosures that have happened or the ones in the court right now. i was listening to my local radio station and this guy from buy back america.com tim aalders. http://www.buybackamerica.com/ we need to do something. no jobs. disasters happen no one is held accountable. take the bp oil spill. bp has 20 billion dollars that is not paid out yet “held up in court” mean while so many foreclosures in florida. time to take back america. unemployment over 25% they count people collecting? my husbands unemployment just ran out. he has not worked in 1 1/2 years. where is he in the numbers. lets start finding solutions

  3. stripes says:

    It should be renamed the fiscal stiff. These crooks robbed us blind and they owe us quintillions & they are forcing us to pay them for our robbery.

  4. Sarah says:

    The fiscal cliff is another political grandstand to steal from most of the population so that corps and Banksters can maintain their status quo. Something has to give, and it won’t be their profits, it will be your benefits and dignity, and housing. The current Bankster President and many of the same whorehouse of stooges could have provided principle reduction in 2009, but refused to do so.

    • neidermeyer says:

      Benefits will not be cut (except by inflation) , Obama will not sign onto that … Obama will continue to spend $1.5-$2Trillion each year that we don’t have … and will continue to “pay” for it with freshly printed cash (digital and legacy) … We went over the cliff 5 years ago.. we just haven’t hit the rocks at the bottom yet…

  5. Danelle Hills says:

    But if the loans are fraudulent to begin with, and paid for by when they were securitized, then those foreclosed upon were paid for again by credit default insurance, how is there a valid principal to reduce? Maybe I am misunderstanding a lot of things. But I do know the banks and lenders should have to eat those loans, and there should not BE a principal left if there was no valid loan to begin with. What am I missing here? No one wants to admit the sight of the elephant in the room?

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