In a Monday letter, Attorney General Lisa Madigan, along with eight other attorneys general, called for the replacement of Federal Housing Finance Agency Director Edward DeMarco.
The attorneys general said in the letter that both Fannie Mae and Freddie Mac “remain an obstacle to progress by refusing to adopt policies that will maximize relief for homeowners,” adding that the FHFA needs new leadership “who will address the foreclosure crisis in a meaningful way to help bolster the nation’s economic recovery.”
While the U.S. Treasury has maintained that principal write-downs could save the mortgage giants money through a reduced number of defaults, DeMarco has opposed the plan, saying that it could force taxpayers to take on additional risk, The New York Times reports.
Additionally, the attorneys general said that principal reductions are a critical component of the national foreclosure settlement and continue to provide relief to distressed homeowners. The attorneys general also said that the FHFA’s continued opposition to principal forgiveness actually reduces the value of its portfolio.
“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 said. “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.”
Since the beginning of the housing crisis, Fannie and Freddie have been managed via the FHFA.
Other parties to the letter include Kamala Harris of California, Beau Biden of Delaware, Douglas Gansler of Maryland, Marth Coakley of Massachusetts, Catherine Cortez Masto of Nevada, Eric Schneiderman of New York, Ellen Rosenblum of Oregon and Bob Ferguson of Washington.