Lawmakers Contradict on Speeding up Foreclosures
CNBC Real Estate Reporter
Wednesday morning House Committee on Oversight and Government Reform Ranking Member Elijah Cummings (D-MD) issued a press release detailing a letter he sent to the conservator of Fannie Mae and Freddie Mac, FHFA Acting Director Ed DeMarco.
The letter requested information on $150 million in penalties that the two mortgage giants levied on mortgage servicers for "failing to conduct foreclosures fast enough."
"I am concerned that these penalties, at least some of which were ordered by the Federal Housing Finance Agency (FHFA), may have contributed to widespread abuses by mortgage servicing companies and law firms attempting to meet arbitrary deadlines to expedite foreclosures," Cummings wrote, according to the release.
The letter also cites an FHFA Inspector General report that found, "servicers, attorneys, and other supporting personnel were overloaded with the volume of foreclosures." The letter goes on to allege that, "the size and timing of these penalties raise serious questions about whether FHFA may be more interested in expediting foreclosures to clear its books than protecting the rights of homeowners."
Fast-forward about four hours to a hearing of the very same committee, and its star witness, FHFA Acting Director Ed DeMarco. The hearing was billed as a berating over executive bonuses at Fannie Mae and Freddie Mac, but toward the end of the seemingly endless questioning, DeMarco bemoaned the fact that foreclosures are still taking too long.
"We are foreclosing on properties that have had no payments for two, three years or more. It's damaging the taxpayer because we have to maintain these properties for so long and it's damaging to our communities," he told the committee.
To wit, Rep. Darrell Issa (R-CA), the chairman of the committee, who has the power to direct money between states and the federal government, asked DeMarco for a list of states that were particularly slow in churning out foreclosures and thereby affecting Fannie and Freddie's bottom lines.
"We're open to making the changes necessary to help," Issa told DeMarco.
Okay, so he could ostensibly withhold funding from states over foreclosure delays. I'm guessing that would be in an effort to push judges to stop delaying foreclosures, because it's judicial states where the biggest lag times are. A state can't force a loan servicer to do anything. So according to one committee member, it's bad to push the servicers to ramp up foreclosures, but another thinks it's good to push the judges to rubber stamp them faster? I realize these are two different lawmakers from two different sides of the aisle, but seriously folks, are fines/funding threats really the answer?