May 30, 2012-- Fourteen members of the California Congressional Delegation sent a letter (click for PDF) to the Federal Housing Finance Agency blasting its involvement and opposition to key pieces of the Homeowner Bill of Rights package being considered in Sacramento.
The California Reinvestment Coalition and Tenants Together applaud the leadership of the California Congressional Delegation on this matter. The Homeowner Bill of Rights package introduced by Attorney General Kamala Harris, intends to protect homeowners and tenants from the egregious and unlawful practices that banks have made well-known among our communities. FHFA’s unsolicited sojourn into California’s legislative affairs is shameful, yet expected. FHFA’s refusal to allow principal reduction on Fannie Mae and Freddie Mac loans, support for the “dual track” problem, and weak tenant protection policies has drawn the ire of homeowners, tenants, advocates, and policymakers. Earlier this year, 97 organizations signed onto a CRC letter demanding that FHFA Director Ed DeMarco make these important policy changes or resign his post.
On May 11, the Federal Housing Finance Agency (FHFA)-- the government agency charged with overseeing Fannie Mae and Freddie Mac—sent an unsolicited letter (click for PDF) to the Members of the California State Legislative Conference Committee who are considering bills intended to prevent foreclosures and create strong protections for California homeowners and tenants. In the letter, FHFA defined a number of the provisions in the bills as “overly broad”, “disproportionate to the perceived problem”, “punitive” of banks, and “increasing legal risks for lenders and investors”. The Agency laid out its critiques without any substantial analysis of the scope of the problem in California, and sounded more like a letter from the banking industry than from an independent regulator charged with helping homeowners and “serving the public interest”.
Today’s letter from the California Congressional Delegation showed support for California’s homeowners and tenants, and urged independence in the legislative affairs of the state. The Delegation called for an investigation of FHFA’s lobbying activities and blasted their lack of expertise of California state legislation. The letter states, “[FHFA’s] letter…demonstrates a clear bias toward the lending industry’s preferred position. Such advocacy on behalf of a private industry, particularly in a matter related to existing state law, is a very questionable activity for an independent federal regulatory agency to undertake, let alone one with an expressed mandate to act in a manner consistent with the public interest.”
The California Reinvestment Coalition and Tenants Together support the California Congressional Delegation call for an investigation of FHFA’s lobbying activities. Nearly 671,000 California families are currently at risk of losing their homes. FHFA’s letter presents the foreclosure process in California as going smoothly, but California homeowners, tenants, and advocates unequivocally disagree. The recent $26 billion National Mortgage Settlement is just one of the many examples that make the case against FHFA’s optimism.
Our state legislature is considering important pieces of legislation that would give homeowners a full and fair chance to renegotiate their loans and prevent more foreclosures and evictions in our hard-hit state. The Legislative Conference Committee is considering important protections for Californians that include:
- Substantial restrictions on “dual track”, including a requirement that borrowers who apply for a loan modification in the first 120 days of delinquency get a yes or no determination before the foreclosure process commences; and borrowers who apply for a loan modification after the foreclosure process begins should have the opportunity to have their application considered before the foreclosure process continues. In cases where banks fail to follow these simple procedures, homeowners should have the opportunity to remain in or get back their homes.
- Procedural reforms requiring servicers to provide borrowers with ample evidence of the servicer’s right to bring foreclosure actions, including the original note and mortgage, and evidence of chain of title.
- Stronger protections for tenants living in foreclosed properties, including provisions for banks to honor leases, and provide at least 90 days notice to tenants without a lease.
CRC and Tenants Together support the immediate enactment of these reforms in California statutes. Instead of impeding the efforts to protect homeowners and tenants, the Federal Housing Finance Agency should stop sounding like the banking industry and immediately enact these same policies at Fannie Mae and Freddie Mac.