California Attorney General Kamala Harris asked the Federal Housing Finance Agency on Feb. 24 to halt California foreclosures and to consider debt forgiveness for homeowners, Bloomberg reported.
Harris addressed her request to Edward J. DeMarco, acting director of the FHFA, and asked that foreclosures in California — where more than 60 percent of home loans are owned or guaranteed by Fannie Mae and Freddie Mac — be suspended until the FHFA completes a “thorough and transparent analysis of principal reduction,” Bloomberg reported.
More than 500,000 Californians have lost their homes to foreclosure since 2008, and another 500,000 homes are in the process, or at “imminent risk,” of foreclosure in 2012, Harris noted in her letter to DeMarco, Bloomberg reported.
Harris’s letter referenced the $26 billion settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial where the banks committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments. The settlement does not cover loans owned or guaranteed by Fannie or Freddie because, as Harris wrote, DeMarco has “consistently declined to authorize principal reduction programs,” Bloomberg reported.
On Dec. 20, 2011, Harris sued Fannie Mae and Freddie Mac, saying they were stonewalling her effort to learn if drug dealing and prostitution occur in foreclosed homes, whether taxes were paid on the properties and whether military families were illegally evicted by servicers. She demanded that they respond to 51 investigative subpoenas asking them to identify all California homes on which they foreclosed.
In her Feb. 24 letter, Harris noted that principal reductions offer the most help for homeowners and investors and, according to the FHFA’s own data, are in the best interest of taxpayers, Bloomberg reported.