Dems Rip White House for Going 'AWOL' on Mortgage Crisis
Leading House Democrats are accusing the Obama administration of ignoring the lingering mortgage crisis and threatening tens-of-millions of Americans with foreclosure in the process.
The lawmakers – encouraged by Obama's mention of mortgage-relief in his address to Congress last week – were quickly deflated just days later when their efforts to learn the details of the White House plan proved unsuccessful.
"The administration has been AWOL on this issue," charged Rep. Dennis Cardoza (D-Calif.), "and the American people are suffering because of the mismanagement."
"In my entire political career, I've never seen anything this irresponsible," he added.
The Democrats were fired up after the administration declined their request for a briefing with Edward DeMarco, the acting director of the Federal Housing Finance Agency (FHFA), on the specifics of the White House plan.
Instead, said Rep. Elijah Cummings (D-Md.), "they [FHFA] sent us some career employees, and they were not able to answer the questions that we were most concerned about."
"We need to have [DeMarco] here to address the questions," said Cummings, the senior Democrat on the Oversight and Government Reform Committee. "He's the person who answers directly to the president."
Cardoza said that, during a June 2 Democratic Caucus meeting with Obama at the White House, the president vowed to propose "a very significant housing initiative in September."
"Today we just heard that they don't know anything about it at the FHFA," Cardoza said.
Neither the White House nor the FHFA responded to requests for comment.
Hours later, Cummings and Cardoza spearheaded a letter to DeMarco requesting a face-to-face meeting. Twenty-eight other House Democrats and one Republican – Oversight Committee Chairman Darrell Issa (R-Calif.) – endorsed the letter.
Cummings said he expects such a meeting in the next two or three weeks.
Cardoza said there's a growing sense the administration is stone-walling.
"They're giving us the same speech they'd given us months before," he said. "We've seen this dog-and-pony show before. It's nothing new. … That's the frustration.
"DeMarco either needs to do something," Cardoza added, "or he needs to get out of the way."
Addressing the joint session of Congress last week, Obama dedicated two sentences to the ongoing foreclosure crisis, vowing to bolster his efforts to help struggling homeowners.
"We’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent," Obama said. "That’s a step that can put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices."
From the audience, Cardoza – who represents one of the districts hit hardest by the foreclosure crisis – shot to his feet in applause.
After the speech, Cardoza and House Minority Leader Nancy Pelosi (D-Calif.) stuck around the House chamber to discuss mortgage relief with administration officials.
Pelosi's office did not respond to requests for comment Thursday.
DeMarco said after the speech that FHFA is "reevaluating" a two-year old program – the Home Affordable Refinance Program (HARP) – "to determine if there are ways to extend the benefits of this refinance product to more borrowers."
But some Democrats say the White House needs to do more than dabble at the edges of programs that didn't live up to their billing. The roughly 850,000 loans refinanced under HARP, for instance, fell well short of the administration's initial estimates.
"It doesn't seem like they get it, and they don't get it in this sense: Everything they've tried so far has not worked," Rep. Jim Costa (Calif.) said Thursday. "I'm not convinced that you can tweak this effort … and make it successful."
Another problem, Costa charged, is that the administration is sending community banks conflicting messages. On one hand, the White House is asking them to build up capital and write off their bad loans, he said. On the other, it's asking them to help struggling homeowners refinance in ways that would hurt the banks' bottom line.
"Their policies are in contradiction with one another," Costa said.
Consumer groups, meanwhile, are wondering why it's taken so long for policymakers to turn their sights on the lingering housing crisis, which was a central cause of the Great Recession to begin with.
"You're not going to create jobs until you fix the economy; you're not going to fix the economy until you fix housing; and you're not going to fix housing without addressing foreclosures," said Kathleen Day, spokeswoman for the Center for Responsible Lending, a consumer advocacy group.
Adding to the urgency, foreclosure filings – including mortgage defaults, scheduled auctions and bank repossessions — jumped to nearly 230,000 in August, up 7 percent from the month before, according to a Thursday report from RealtyTrac, an online foreclosure database.
Default notices – affecting nearly 80,000 properties – were up 33 percent, RealtyTrac reported. In California the figure was 55 percent.
"The American Dream is in real jeopardy – today," Cardoza warned.
Cardoza didn't limit his blame to the president, noting that Obama's pick to replace DeMarco with a permanent FHFA director was blocked by Sen. Richard Shelby (Ala.), senior Republican on the Banking Committee.
"That vacancy needs to be filled," Cardoza said, "[and] the Senate needs to quit playing politics."
Obama, he added, "can't be expected to administer a policy when he can't put his people in place."
Still, the California Democrat reserved his harshest criticism for the White House.
"I couldn't wait to get Obama in office because I was sure a Democrat would do a better job," Cardoza said, referring to the foreclosure-relief efforts under the Bush administration. "And, frankly, nothing's happened. The programs that were put in place were abysmal failures."