“I will fight to stop Fannie and Freddie from punishing Connecticut for protecting its citizens from unfair and abusive foreclosure practices,” Blumenthal said. “I am seeking immediate action to reverse this misguided, unacceptable decision.”
“It’s outrageous that after banks preyed on homeowners with subprime loans and improper foreclosures, FHFA now wants to penalize homeowners in states that have strong consumer protections to stop banks from wrongfully foreclosing,” Menendez said. “Responsible new homeowners shouldn’t have to pay more because poor foreclosure procedures by banks have led courts to delay or stop foreclosures on older loans."
The lawmakers said the decision was punishment to states that have stronger protections for homebuyers.
“Fannie and Freddie are raising fees on Connecticut homebuyers because their state provides a mediation system that helps homeowners and lenders find mutually beneficial alternatives to foreclosure,” Blumenthal said. “Connecticut’s common-sense judicial safeguards protect homeowners from robosigners, fraudulent affidavits and other big-bank tactics that have violated the rights of too many families across the country.”
Blumenthal added that FHFA’s proposed fee would increase costs for consumers trying to achieve homeownership. He cited reports that said the fee would increase 30 basis points, adding 0.3 percent on a loan.
Menendez had other ideas on how the FHFA could improve the system for borrowers.
“If FHFA is concerned about saving taxpayer money, they should immediately enact my Responsible Homeowner Refinancing Act that virtually everyone agrees will help millions of borrowers and save taxpayer money too,” Menendez said. “And they should allow Fannie and Freddie to engage in targeted principal reductions in those cases where it would save taxpayer money.”