The other day we appeared on Sam Seder's program, The Majority Report, to discuss the radical-right ideology of Edward DeMarco, a Bush appointee who became Acting Director of the Federal Housing Finance Agency (FHFA) and continues in that role because Congress won't confirm President Obama's nominee.
Hear Richard Eskow on "The Majority Report" discuss Federal Housing Finance Agency acting director Edward DeMarco's role in blocking real mortgage relief to families facing foreclosure or who are financially under water.
As we wrote last week, DeMarco is single-handedly blocking relief for millions of struggling homeowners and is using deception to justify his actions. He refuses to allow Fannie Mae and Freddie Mac, the two government-sponsored enterprises he now directs, to reduce principal or even interest rates. Some underwater homeowners are paying as much as 7 percent interest, while loans are now available at 4.3 percent.
DeMarco deceived lawmakers by suggesting it would cost $100 billion to write down mortgage principal while, as we wrote last week, his own agency's estimates show that it would probably save more than $28 billion.
It gets worse. Even in the days since we taped this interview the DeMarco train has continued to ride the housing market off the rails. An academic has studied DeMarco's insistence on increasing the Fannie/Freddie financial portfolio -- which he says has no bearing on his refusal to do more to help homeowners -- and has concluded that "there is a very significant conflict of interest" which DeMarco and others have understated.
DeMarco's team has invested roughly $5 billion of Freddie Mac's $650 billion in "reverse floaters" which are essentially bets that the homeowners who aren't being helped by DeMarco's team will never get helped. That conflict of interest is actually understated, said Christopher Mayer of Columbia Business School, because these "floaters" are derivatives which link back to $26 to $30 billion in mortgages. That makes the amount of mortgage loans subject to this conflict five to six times what was originally believed.
It gets even worse. Adding insult to injury, Fannie Mae is currently hunting for a new CEO. Which names are at the top of the list? One of them is Fannie Mae's current Chief Counsel, Timothy Mayapoulos. What did Mayapoulos do before he joined Fannie Mae? He was chief counsel for Bank of America in 2008, when BofA was neck-deep in a wave of foreclosure fraud and other criminal activity. Bank of America has signed a number of multimillion dollar SEC settlements, and paid $410 million to settle charges that it illegally processed debit card transactions out of order in order to maximize overdraft fees.
That happened on Mayapoulos' watch.
But Bank of America's former top lawyer isn't the only candidate that DeMarco and his team are considering. Another candidate is David Stevens, CEO of the Mortgage Bankers Association. What does the Mortgage Bankers Association do? For one thing, it owns and operates MERS Inc., the shell company that is central to many cases of foreclosure fraud and deception. For another, it's the organization whose previous CEOs lectured homeowners on the immorality of walking away from underwater properties -- while walking away from its own.
That's the kind of CEO that Edward DeMarco thinks should be handling the taxpayers' money and carrying out Fannie Mae's mission "to keep money flowing to mortgage lenders, to help strengthen the U.S. housing and mortgage markets, and to support affordable homeownership."
And that's why Edward DeMarco has to go.