By Mike Lillis - 09/26/11 11:57 PM EDT
Following an outcry from congressional Democrats, the Obama administration has reversed course and will allow lawmakers to meet with a top housing official.
House Democrats, already upset with the administration’s effort to help struggling homeowners, became infuriated earlier this month when their request for a briefing on the White House’s new housing plan was denied.
Instead, said Rep. Elijah Cummings (D-Md.), “[FHFA] sent us some career employees, and they were not able to answer the questions that we were most concerned about.”
The meeting between lawmakers and DeMarco has been tentatively scheduled for Oct. 6.
Cummings, the ranking member of the House Oversight and Government Reform Committee, has defended the Obama administration on a range of issues this year.
Cummings and his Democratic colleagues are seeking details of the administration’s new foreclosure-prevention efforts after President Obama vowed this month “to work with federal housing agencies to help more people refinance their mortgages” in order to take advantage of historically low interest rates.
“That’s a step that can put more than $2,000 a year in a family’s pocket and give a lift to an economy still burdened by the drop in housing prices,” Obama said Sept. 8 before a joint session of Congress.
In response to Obama’s speech, FHFA said it’s reviewing its two-year-old refinancing initiative — the Home Affordable Refinance Program (HARP) — “to identify possible enhancements that would reduce barriers for borrowers already otherwise eligible to refinance” their mortgage loans.
While encouraged by those developments, a number of Democrats remain critical that the administration hasn’t done more to help homeowners harmed by the historic housing bust. They say the administration plan is contradictory, aiming to prop up Fannie and Freddie while also helping homeowners refinance at lower rates, which would cut into the lenders’ bottom lines.
“The administration has been AWOL on this issue,” Rep. Dennis Cardoza (D-Calif.) said earlier in the month, “and the American people are suffering because of the mismanagement.”
Cardoza’s exasperation with the housing policies of the Obama administration are not new. In 2010, Cardoza — whose district has been hit especially hard by foreclosures — called for the resignation of Housing and Urban Development Secretary Shaun Donovan.
New housing figures released Monday show that new home sales dropped 2.3 percent in August relative to July, marking the fourth straight month of decline, the Commerce Department reported.
Unveiled last Monday, Obama’s plan for growing the economy and cutting deficit spending includes a renewed effort to encourage lenders, regulators and Fannie and Freddie to refinance more underwater mortgages for the sake of preventing foreclosures.
“This has the potential to not only help these borrowers, but their communities and the American taxpayer, by keeping borrowers in their homes and reducing risk to Fannie Mae and Freddie Mac,” according to a White House summary of the plan.
It’s not only House lawmakers who are scrutinizing the administration’s foreclosure relief efforts. Last week, Sens. Barbara Boxer (D-Calif.) and Johnny Isakson (R-Ga.) suggested FHFA officials have been too slow to help homeowners left underwater by the lingering housing crisis.
Boxer and Isakson are pushing legislation empowering even underwater homeowners to refinance their mortgage loans at lower rates, regardless of their credit scores. Meantime, however, the lawmakers are wondering why the administration doesn’t take that step unilaterally.
“While we continue to pursue our bipartisan bill to reduce barriers that have trapped responsible borrowers in higher-interest loans, taking such steps administratively would provide immediate relief to these borrowers,” the senators wrote in a Sept. 20 letter to DeMarco. “Every day, more struggling homeowners fall behind on their payments. We urge you not to delay further and ask that you provide us a timeline of expected next steps.”
FHFA spokeswoman Stefanie Johnson said the agency has received the letter and is still working on a response.