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 "Unfortunately, Fannie Mae and Freddie Mac remain an obstacle to progress by
refusing to adopt policies that will maximize relief for homeowners," Madigan
said. "It is time for new leadership at the agency who will address the
foreclosure crisis in a meaningful way to help bolster the nation's economic
recovery."
In the letter, the attorneys general argue that principal markdowns are a
central component of the national foreclosure settlement and continue to bring
meaningful relief to distressed borrowers, helping the local housing market and
the economy overall.
The FHFA's continued position that principal forgiveness conflicts with its
goal of asset preservation is "not supported by reality," the attorneys general
assert in the letter. The agency's current policy actually reduces the value of
its holdings portfolio. It is far more profitable for any financial institution
to hold a portfolio of performing $200,000 mortgages that keeps families in
their homes than a portfolio of nonperforming $250,000 mortgages headed toward
default, according to the letter from the attorneys general.
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"We have worked tirelessly, along with our federal, state and local
partners, to develop a multi-pronged approach to dealing with the
foreclosure crisis," the letter concludes. "Fannie Mae and Freddie
Mac should be among our partners in this effort and leaders in the
arena of loan modification best practices. Instead, they have been
an obstruction."
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan]
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