By Vicki Needham - 04/02/12 06:50 PM EDT
"Our constituents and responsible homeowners can no longer wait, and as elected officials responsible for oversight of your agency, neither can we.”
The letter highlighted proposals recommended to the Banking Committee by Republican and Democratic witnesses during hearings and by the Federal Reserve.
"While a concerted effort to increase refinancing alone will not solve the entire housing crisis, such a prudent step can help stabilize our housing sector and strengthen our economic recovery as well as helping individual families," the lawmakers wrote.
DeMarco last appeared before the panel on Feb. 28 and asked lawmakers for their suggestions on actions that could be taken beyond the HARP changes announced in October.
The central bank made some suggestions to expand Fannie Mae and Freddie Mac refinancings in a housing white paper sent to Congress in January.
That plan suggested reducing mortgage principal to help homeowners who are current on their payments but underwater on their loans. The Fed paper said it might cost taxpayers more in the short term, but would likely help the housing sector in the long run.
DeMarco has been reluctant to consider reducing mortgage principal but has been recently talking with Treasury Secretary Timothy Geithner on an efficient, cost-effective route.
The Fed paper also suggested reducing or eliminating remaining loan-level price adjustments for HARP refinances where Fannie and Freddie already carry the credit risk on the original mortgage and streamlining the financing process for borrowers with loan-to-value ratios below 80 percent.
"By increasing the affordability of mortgages already backed by Fannie Mae and Freddie Mac, such refinancing steps should even lower the default risk to the enterprises," the lawmakers wrote.
In a Feb. 9 hearing on the state of the housing market, Democrats, Republicans and leading economists voiced strong support for these and other recommendations.
One economist noted that the “conservator could take many other steps that would reduce the losses in foreclosures and open up credit but has chosen not to do it.”
Another economist called this approach “a slam dunk."
"You should work very hard to facilitate more refinancing through Fannie, Freddie and FHA loans," the economist said.