More than two dozen California House Democrats – including almost the entire Bay Area delegation, and led by three Bay Area members – have urged President Barack Obama to make a recess appointment that could bring a national mortgage-refinancing wave which in turn could stave off countless foreclosures.
Reps. Anna Eshoo, D-Palo Alto; Zoe Lofgren, D-San Jose; and Mike Thompson, D-Napa led the effort to convince the president to appoint a new director to the Federal Housing Finance Agency, which oversees mortgage backers Fannie Mae and Freddie Mac; the FHFA has been without a permanent director for two and a half years.
“Republicans in the Senate have been playing games with the American people by blocking the Federal Housing Financial Authority from having a proper leader,” Lofgren said in a news release. “These are difficult times and we need to be doing everything we can to prevent foreclosures and keep families in their homes. I urge President Obama to take immediate action and appoint a permanent director.”
As the Washington Post’s Ezra Klein blogged yesterday, there’s some bipartisan consensus that “the agency could write the rules so that anyone with a loan backed by Fannie and Freddie and current on their payments for six months would be automatically approved for refinancing.”
“The effect on the economy would be twofold: First, the refinancings would act like a high-powered tax cut for those homeowners who took advantage of them,” Klein wrote. “As Hubbard and Mayer write, ‘Empirical evidence suggests that consumers spend a larger portion of permanent increases in income than temporary increases.’ And as these refinancings would lower payments, they’re as permanent as you can get in government policy. Second, it would make the Fed’s efforts to keep interest rates low more effective in stimulating the economy.”
More than two million California homeowners are considered “underwater” because they owe more on their homes then their homes are worth; that’s about three in 10 of all California homes with mortgages.
Eshoo today said the national economy “cannot fully rebound unless and until housing is addressed. The current situation of foreclosures is unacceptable.”
Rep. Jerry McNerney, D-Pleasanton, issued a release noting this region has been disproportionately affected by the financial and housing crises.
“Families are faced with foreclosures, even as unemployment remains high. We can’t wait to have leadership to help folks stay in their homes,” he said. “Keeping folks in their homes is critical to the economic health of our communities. More has to be done to give people a clear path to avoiding foreclosure.”
The only Bay Area House member who didn’t sign the letter was House Minority Leader Nancy Pelosi, D-San Francisco.