Letter from Secretary Geithner to Acting FHFA Director DeMarco on the Principal Reduction Alternative (PRA) Program

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Letter from Secretary Geithner to Acting FHFA Director DeMarco on the Principal Reduction Alternative (PRA) Program

Letter from Secretary Geithner to Acting FHFA Director DeMarco on the Principal Reduction Alternative (PRA) Program

via: Treasury.gov

Today, Secretary Geithner sent the following letter to Acting Federal Housing Finance Agency Director Ed DeMarco on the Principal Reduction Alternative (PRA) program. Read the full letter here: letter.to.demarco.pdf?

***

July 31, 2012

Federal Housing Finance Agency

Office of the Director

400 7th Street S.W.

Washington, D.C. 20024

Dear Acting Director DeMarco,

I am writing in response to the decisions announced in your letter to Congress today.  While I was encouraged that the Federal Housing Finance Agency (FHFA) is making progress on some initiatives we have discussed that will help the housing market recover, I am concerned by your continued opposition to allowing Fannie Mae and Freddie Mac (GSEs) to use targeted principal reduction in their loan modification programs.  

FHFA is an independent federal agency, and I recognize that, as its Acting Director, you have the sole legal authority to make this decision.  However, I do not believe it is the best decision for the country, because, as we have discussed many times, the use of targeted principal reduction by the GSEs would provide much needed help to a significant number of troubled homeowners, help repair the nation’s housing market, and result in a net benefit to taxpayers. 

Indeed, notwithstanding the selective numbers cited in your letter, FHFA’s own analysis, which you have shared with us previously, has shown that permitting the GSEs to participate in the Principal Reduction Alternative program (HAMP-PRA) could help up to half a million homeowners and result in savings to the GSEs of $3.6 billion compared to standard GSE loan modifications. Furthermore, if the GSEs were to participate in HAMP-PRA, taxpayers would save as much as $1 billion on a net basis.  In view of the clear benefits that the use of principal reduction by the GSEs would have for homeowners, the housing market, and taxpayers, I urge you to reconsider this decision. 

I have asked Michael Stegman of my staff to restate in writing for you the case for principal reduction, consistent with FHFA’s mandates as conservator and regulator of the GSEs, that the Treasury has made to you and your staff over the last several months.  His memorandum is enclosed.  Treasury stands ready to provide any additional analytical support to make a targeted principal reduction program at the GSEs successful.

We welcome the positive steps you announced today regarding further refinancing opportunities, providing clarity to lenders on legal exposures, aligning short sale practices, and putting foreclosed properties back on the market.  All of these have the potential to help advance recovery of the housing market.  As we have previously discussed, the impact of these steps will depend on the speed with which you act and the extent of the changes you make.   

Five years into the housing crisis, millions of homeowners are still struggling to stay in their homes, and the legacy of the crisis continues to weigh on the market.  You have the power to help more struggling homeowners and heal the remaining damage from the housing crisis.  I hope you will move to address these problems with a sense of urgency and force commensurate with the scale of the remaining challenges.  

Sincerely,

Timothy F. Geithner?

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6 Responses to “Letter from Secretary Geithner to Acting FHFA Director DeMarco on the Principal Reduction Alternative (PRA) Program”

  1. Ray says:

    It is amazing how one man can manipulate the world economy…I am referring to both
    DeMarco and Geithner individually, as well as Obama for sitting on his hands and grinning that stupid grin. Their sins are Mortal indeed!!

  2. Ken Hansen says:

    Geithner knew all about the fraudulent Libor rate, i.e. the biggest fix the world has ever seen, since at least 2007. What did he do about it? He wrote a letter.

  3. dinsfla says:

    Neil’s book “Bailout” explains more on how Timmy ignored warnings. He has no place to write any letters.

  4. Charles Reed says:

    This is Obama fault because during the lame duck session he should have done a recess appointment to the position. Let me show you Obama Administration biggest failure in this area when it kept too the “we will only help responsible borrowers”. The Treasury spent $1 trillion on buying mortgage back securities to artificially lower the interest rate that only refinanced borrowers who already had low interest rate but those with lower but still prime score or underwater could not refinance.

    So who made the money? The big lender who refinanced not only there own loan but took all the smaller lenders loans and refinanced there too in this big cherry picking scheme. Just as there was no demands to the TARP handouts to the big banks, to refinance and and modify all these loans instead we got a program within a program, form corrupt lending to corrupt modification that now being reviewed by an alleged Independent Foreclosure Review Board because the regulators who for the last 3.5 yrs did not find a single thing wrong, all a sudden does a review and found widespread corruption after the 50 State Attorney Gen conducted their own investigation.

    Now a years and 3 months after the crooks signed an agreement to review 4.4 million foreclosures not a single dime had been paid out as if people where still in their homes and not in parks, vans or under bridges raising their children!

  5. Charles Reed says:

    Let me add this, we got late Timmy who we just now are finding out about the LIBOR rigging that he did not tell the Justice Dept about, and now just before the election and a great chance this Administration is done now that Mitt told Israel they can kept the money Madoff got in bank there and off shore accounts we be welcome and his got their back on Wall Street.

    Now this dude in the last 98 days until election write a letter asking that people be allowed to refinance as if this Republican want to be another Judge Roberts. The chances he was going to say no were 100%!

  6. Elaine says:

    If any of Obama’s “programs” had any teeth Timmy wouldn’t be begging Ed DeMarco to change his mind! WTF? The banks caused this mess but all they got were fines – no punishment. Trust me a million dollar fine sounds huge to you and I but to them – ehh- chump change! Not one of them who took bailout money had to participate in any of Obama’s toothless/useless programs. None of them were told how to conduct business. None of them were told – you can’t string people along who are making modification payments as agreed and then foreclose. What is so maddening is that stupid carrot and stick approach of giving servicers what, ~$1,000 per successful modification. Again chump change to them. How come no one in DC has the balls to use just the stick approach by making bailout money contingent on modifications–modifications on fraudulently over appraised homes, on predatory loans, on teaser rates that were offered to some of us who are less sophisiticated – just to name a few of the really bad and greedy things they did. As for the less sophisticated – Gee I don’t know could it be some of us are less financially savvy because we’re too busy working our asses off at two jobs trying to keep a roof over our heads, trying to make ends meet all the while paying more of a percentage in taxes than they do! All the while our pension funds and 401k have shrunk dramatically. Unlike them we don’t have army of tax attorneys to help us avoid paying taxes helping us preserve our wealth, making sure we don’t buy junk bonds – like the ones that were sold to police, teacher, firefighter, etc unions entrusted to invest our money. And of course none of us are going to be able to refinance – EVER becaue of this mess. My credit is ruined and at my age I’ll be 6 feet under before the score gets above 520.

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