A senior House Democrat asked a top housing regulator on Tuesday for federal foreclosure assistance for Detroit as the hard-hit city goes through bankruptcy proceedings.
Rep. John Conyers (Mich.) sent a letter on Tuesday to Mel Watt, director of the Federal Housing Finance Agency (FHFA), asking for immediate action to assist distressed homeowners in Detroit as the city goes through Chapter 9 bankruptcy.
In addition, Conyers called on Fannie and Freddie to provide local borrowers with alternatives to foreclosures, such as making mortgages more affordable.
The request came as Watt, in his first public comments since taking over at FHFA in early January, announced that Fannie and Freddie would participate in a pilot program focused on stabilizing neighborhoods n Detroit that could eventually be expanded to help stabilize other distressed communities.
“We’re pursuing pre-foreclosure and post-foreclosure strategies that include deeper loan modifications and partnering with nonprofits earlier in the REO sales process,” Watt said in a speech at Brookings.
“We believe this will be a win-win for hardest hit communities and for our conservatorship objectives," he said.
Conyers asked Watt, a former Democratic lawmaker from North Carolina, to also provide local borrowers with access to long-term loan modifications necessary to avert future foreclosures and evictions that would exacerbate the problems facing Detroit.
"While Detroit has not suffered a physical disaster, it has been forced into its current fiscal situation entailing serious human consequences including cuts to vital city services and hard-earned pensions by factors well beyond city residents’ control,” Conyers wrote.
After the 2008 financial crisis, one in five homes in Detroit were hit by foreclosure, Conyers said.
Conyers argued that at the very least a short-term moratorium on foreclosures and longer-term loan modifications would “go a long way toward stabilizing the city's housing market, which would, in turn, facilitate the rebuilding of the tax base, easing the city's persistent cash flow problems.”
“This would help bolster local levels of consumer demand and attract residents and investment.”