Selection of New Director for Federal Housing Finance Authority is Opportunity to Protect Consumers

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Statement of U.S. PIRG Consumer Program Director Ed Mierzwinski on the nomination of Mel Watt as head of the Federal Housing Finance Authority:

“The Federal Housing Finance Authority (FHFA) should be accountable to consumers, taxpayers and Congress as it works to stabilize housing markets. Instead, efforts by longtime FHFA Acting Director Ed DeMarco have only served powerful special interests, ignoring FHFA’s Congressional mandates and failing to protect homeowners and taxpayers.

“In particular, DeMarco has failed to hold mortgage servicers accountable. His opposition to the use of principal reduction as a loan-modification tool to prevent foreclosures and save taxpayers billions of dollars has threatened the ability of homeowners to stay in their homes. Many homeowners are underwater not due to any fault of their own but due to the reckless actions of the bankers, brokers and servicers who triggered the financial crisis and then exacerbated it with robo-signing and other violations.

“Further, DeMarco’s proposal to override stronger state consumer protection laws by increasing loan guarantee fees (G-fees) in states with strong anti-foreclosure laws not only oversteps his authority and mission, but also ignores the failure of those mortgage servicers to comply with the law.

“The GAO estimates that homeowners lost $9 trillion in home value, and the economy an additional $13 trillion, with millions of homeowners still underwater as a result of the financial crisis that was worsened by regulatory failure. Meanwhile, the banking and housing industries benefited from taxpayer bailouts and not a single banker or mortgage lender engaged in robo-signing or other fraud has spent a day in jail.

“The selection of a permanent FHFA director is an important opportunity to restore this powerful office to a servant of the public, rather than a captured creature of moneyed interests.

“While U.S. PIRG’s Board of Directors has not taken a formal position on the nomination of Rep. Mel Watt (NC) to direct the agency, we note that he is an extremely well-qualified candidate who has stood with consumers on predatory mortgage lending reforms and who has long recognized the importance of the states in our federalist system, where federal laws should serve as a floor, not a ceiling, of protection.”

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U.S. PIRG, the federation of state Public Interest Research Groups, is a consumer group that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society.