Mass Dems say housing regulator is misreading his authority

By Peter Schroeder - 02/06/12 11:34 AM ET

Three Democratic lawmakers from Massachusetts are putting pressure on the nation's top housing regulator to offer more assistance to struggling homeowners and arguing he is misinterpreting his statutory mission.

In a letter sent last week, Reps. Barney Frank, Michael Capuano and Stephen Lynch accused Edward DeMarco, the acting director of the Federal Housing Finance Agency (FHFA), of limiting the nation's economy by being uncooperative with housing relief efforts.

DeMarco is charged with overseeing mortgage giants Fannie Mae and Freddie Mac, which control a substantial portion of the nation's mortgages but are surviving thanks to billions in government support.

As lawmakers and the White House have searched for ways to boost the struggling housing market, DeMarco has resisted some efforts, notably principal reductions on mortgages, as he has maintained that the losses Fannie and Freddie would incur under those programs conflict with his mission to conserve assets for the taxpayers. He has been under consistent pressure from liberal groups and Democrats in Congress to relent, with some calling on the president to replace him with another director.

In their letter, the lawmakers — who all sit on the House Financial Services Committee and helped write the legislation creating the FHFA in 2008 — maintain he is misinterpreting his mission.

"We disagree flatly with the notion there is anything in that statute — or any other federal law — that requires you to withhold your cooperation from this effort to the extent you have," they wrote.

They argue that DeMarco might actually be doing harm to the taxpayers by resisting those housing relief efforts, because that resistance could be slowing the economic recovery.

"It is of course important for all of us to protect the taxpayers. But taxpayers are not only not protected, but they are exposed to further problems when efforts that could enhance the pace of economic recovery are opposed as they have been by your agency," they wrote.

The lawmakers wrote their letter in support of another letter DeMarco received from Massachusetts Attorney General Martha Coakley. In her letter, she took him to task for refusing to expand mortgage modification programs, calling it "so troubling."