House Democrats press for homeowner help in 'fiscal cliff' deal

By Vicki Needham - 12/11/12 02:45 PM ET

House Democrats are pressing the White House and congressional leaders to provide assistance to struggling homeowners in a year-end agreement on taxes and spending issues.

Maryland Rep. Elijah Cummings, ranking member of the House Oversight and Government Reform Committee, along with 18 other lawmakers, sent a letter on Tuesday urging for the inclusion of legislation that would offer principal reductions and refinancing to homeowners who are underwater on their mortgages.

"At a minimum, such legislation should require that Fannie Mae and Freddie Mac offer principal reduction loan modifications to borrowers who are net present value positive," they wrote.

About 10.8 million, or 22.3 percent of all residential properties, were still underwater at the end of the second quarter of this year, according to a September report by CoreLogic.

Treasury Secretary Timothy Geithner has said that a principal reduction program “would provide much needed help to a significant number of troubled homeowners, help repair the nation’s housing market and result in a net benefit to taxpayers.”

In July, the Federal Housing Finance Agency (FHFA) released a study showing that offering principal reduction modifications could help as many as 500,000 homeowners and save Fannie and Freddie as much as $3.6 billion while saving taxpayers about $1 billion.

The Obama administration has suggested providing $50 billion in stimulus spending to assist struggling homeowners and address the continuing foreclosure problem.

"Given the clear benefits of providing assistance to underwater borrowers, as well as the significant savings for the American taxpayers, we believe that provisions expanding such assistance should be part of any deal to resolve the fiscal cliff,” they wrote.

The following members signed the letter: Reps. David Cicilline (R.I.), Mike Thompson (Calif.), John Lewis (Ga.), Brad Miller (N.C.), Keith Ellison (Minn.), Zoe Lofgren (Calif.), Raúl Grijalva (Ariz.), Mike Honda (Calif.), George Miller (Calif.), John Tierney (Mass.), Barbara Lee (Calif.), Mel Watt (N.C.), Jan Schakowsky (Ill.), Barney Frank (Mass.), Laura Richardson (Calif.), Lynn Woolsey (Calif.), Marcia Fudge (Ohio) and Edolphus Towns (N.Y.).