With its announcement of a limited principal reduction program, Bank of America must prove commitment to homeowners and rebuilding the economy it broke
Underwater homeowners and faith leaders also call on President Obama to replace FHFA head Ed DeMarco who is “holding our economy and millions of homeowners hostage”
With HUD Secretary Shaun Donovan’s announcement that Bank of America has agreed to reduce principal for a certain selection of underwater homeowners, it appears the big bank has finally bowed to pressure from consumer, housing, civil rights, and faith groups. But Bank of America has a long history of making big promises that they fail to live up to and are notorious for forcing homeowners to jump through endless hoops to get assistance. The test of this program will come through Bank of America’s actions, not words.
Bank of America has a long road to go in righting its many wrongs. Its commitment to this program and expanding it could help families stay in their homes and be a catalyst for other big banks, Fannie Mae and Freddie Mac to start reducing all of their underwater mortgages to reflect fair market value,.
According to Secretary Donovan, Bank of America must offer the deal to any borrower who is underwater, delinquent by more than 60 days on their mortgage payments, and whose payments account for more than a quarter of their income. Borrowers whose loans are owned by other banks, or by Fannie Mae and Freddie Mac, will not be eligible.
It’s also time for other big banks like Wells Fargo and JPMorgan Chase to step up and follow suit by offering principal reductions on all of the loans they own. Most importantly, Fannie Mae and Freddie Mac, who own more than half the mortgages in the country, must begin offering principal reduction.
Federal Housing Finance Agency Acting Director Edward DeMarco, who oversees Fannie Mae and Freddie Mac, has flatly refused to do principal reduction for the millions of mortgages they own or guarantee. DeMarco is not a household name, but should be as he is holding our economy and millions of homeowners hostage.
DeMarco is ideologically opposed to principal reduction despite ample evidence that it increases the likelihood that borrowers will stay current on their mortgages, thereby saving billions of taxpayer dollars, raising property values and helping people stay in their homes. The New Bottom Line will call on President Obama to replace Ed DeMarco with someone who will be a champion on behalf of struggling homeowners and who will support broad principal reduction for Fannie and Freddie mortgages at a press conference with members of the Congressional Progressive Caucus on March 7 at 12:15 p.m. at the House Triangle.
The President must no longer allow BofA and other big banks to hide behind the skirts of Fannie and Freddie. As President Obama said in February, “we can’t wait” for the mortgage crisis to fix itself.
To arrange an interview with Gordon Whitman, Policy Director of PICO National Network, an organizational member of The New Bottom Line, please call 202-332-5550
The New Bottom Line is a new and growing movement fueled by a coalition of community organizations, congregations, and individuals working together to challenge established big bank interests on behalf of struggling and middle-class communities. Together, we are working to restructure Wall Street to help American families build wealth, close the country’s growing income gap and advance a vision for how our economy can better serve the many rather than the few. Coalition members include PICO National Network, National People’s Action (NPA), Alliance for a Just Society, and dozens of state and local organizations from around the country.
They stand for justice and protecting homeowner rights.