Liberal Political Activists Target a New Villain: Edward DeMarco of the Federal Housing Agency

Categories: Politics

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Photos by Leslie Minora
Local political activists want DeMarco out.
Left-wing activists have taken aim at a man whose name you've probably never heard: Edward DeMarco. He's the director of the Federal Housing Finance Agency, and he oversees mortgage giants Fannie Mae and Freddie Mac. The presidential appointee has become a villainous figure to those who believe lenders should write down loan balances for mortgage holders who owe more than their homes are worth.

Hobie Hukill means business.
For years, the Obama administration has been pressuring Fannie and Freddie to join a federal program to write down mortgages into smaller government-backed loans. DeMarco has resisted, saying in the past that it would not be "loss minimizing" to Fannie and Freddie and warning that writing down loans could encourage more people to default and refinance who otherwise would not.

The liberal political activist group MoveOn gathered yesterday at the corner of Parry and Haskell avenues north of Fair Park, calling for DeMarco's ouster (and they're in good company around the country). Obama has the power to kick him out of office, and they fully believe the president should do just that.

As part of of 200 similar events around the country, MoveOn presented a petition with 60,000 signatures of those calling for DeMarco's removal to Taylor Holden, the regional field director of Obama for America.

"The obvious solution to underwater loans is to write down the principle," Hukill says. "Until that happens, it will be a terrible drag on our economy."

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Faith Evans and Paul Heller
"God help us," Paul Heller said, sitting on a bench next to Faith Evans. The two had become friends through meeting at local protests.

"Things suck generally," Evans answered, smiling and seemingly half-kidding.

"[DeMarco] has not been a leader in getting Freddie and Fannie to renegotiate mortgages," Heller said. The bailouts were for the banks, not the mortgage holders, he said.

None of the MoveOn folks raised their hand when Hukill asked whether they were sinking in the mires of the foreclosure process. They were all there in solidarity. When they presented the petition to Holden, she politely accepted it, thanking them for their activism before they got back to waving their signs at cars as rush hour traffic began building. Several honked in acknowledgement.

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My home is underwater although not by much. Why? Because I bought at the height of the market. Did I expect to make a profit? Yeah, or just break even, or get my principal out. I think that's the thing that kills me. I put 20% down, and it's gone. I don't think of myself as a speculator who took a risk and got burned. But I admit, I didn't see this coming. I don't know what percentage of people are like me as opposed to people who bought beyond their means, or refinanced to go on vacation. But I do know that 20% of Americans have homes under water. That's a lot. So, while everyone is sharing anecdotal stories about people they know who were living beyond their means, bought houses they couldn't afford, were speculating on the market, etc., please realize that many of us are just ordinary people with ordinary 30 year mortgages and ordinary 20% down, with houses under water. We can't refinance, we have no equity, some of us have lost our savings. It's not that we want to remodel or go on vacation. Sometimes it's a genuine financial problem that causes people to refinance their homes. For many Americans, a home was considered a "safe investment". I'm not sure if it's fair to give us a financial break on "an investment" when we're not giving stockholders and other investors a break when the market crashes. But to so many of us, the house is all we have. And if we can bail out a bank, I think we can bail out homeowners.

John D
John D

I think there is a place for principal write-downs, given the circumstances. 

Many people bought homes during a bubble that was inflated by the banks and Wall Street.  People were being lured into easy mortgages to fuel profitable MBSs. Like shovelling coal into a furnace, the entire process depended on a steady stream of home sales and re-sales. The banks who caused the problem were bailed out, and the homeowners were left holding the bag when the bubble burst.

The government reached a settlement with the banks. It's perfectly appropriate to use some of the settlement for principal write-downs.


Purchasing a home with a mortgage is a levered transaction.  With 20% down you are levered 4:1; with 10% down you are levered 10:1; with 5% down you are levered 20:1; with 2% down you are levered 50:1.

In any levered transaction, your equity is at risk prior to the lender's equity.

So if you put 5% down and the price of the house went down by 10%, guess what ... You know longer have any equity and the lender can ask for 5% in order to have the collateral match the loan.

Unfortunately, it is no longer this way.

Banks are often levered at 50:1 or more.  When their equity got wiped out, they put a gun to our heads and threaten to pull the plug on the economic system unless we bailed them out.

Personally, I think that we should have let the banks fail.

Since the feds bailed out the banks (both investment and commercial; as well as, brokerage firms) there is no argument as to why the feds shouldn't bail out the individual homeowner.

However; the whole concept of bailouts is anathemic to me.

There is a difference between getting hit by a beer truck and being greedy.

Should the mortgages be written down?  I don't think so.  Should their be a program to allow the refinancing of existing mortgages where there is insufficient collateral?  Possibly, but that is a slippery slope.


I've got a few financial decisions that didn't perform well, can I get the federales to let me have a "do over"? After all I just didn't expect that Cisco stock would have lost 2/3 of its value, or that the REIT would go BK and pretty much wipe out their value.

That's what these borrowers are asking for, in spite of the fact that they were provided a plethora of information when they took out their loan that told them exactly what they were agreeing to by signing the note.

Just say no. If they want to walk away from these homes, sobeit.


There is no valid reason to right down loan balances. I support a program to allow people to refinance the outstanding balance into a fixed rate loan, at current low rates. No one forced people to go out and refinance the family home during the easy money years then spend the windfall on Denalis and big screen tvs.Same thing with buying an overpriced exurban tract mansion.If you overpaid too bad.

Oak Cliff Townie
Oak Cliff Townie

The still gainfully employed  folks I know who are ones  who were proud of the home they bought. And had no problem with the the two loans it took to get into it .

Now they are freaking out because the Market  fell in the area in where they live . Or in some cases right across the street. Yep a distressed 250K house across the street going for 200 k or 195 K or less .

The price of where they live shouldn't change Just because that happen. Its what they bought it for .They aren't under water they are just ticked because their investment didn't work out.

Tim Covington
Tim Covington

I have mixed feelings on this.

These people agreed to pay back this money. If they competent to sign a contract, they should uphold their end of it.

On the other hand, how smart is it for the banks to insist people who can not pay on these underwater homes continue to pay at the same rate and possibly end up with the home on their hands. The bank selling the home at auction will guarantee that they get even less money than if they wrote down some of the loans to fair market value.

Citizen Kim
Citizen Kim

I'm generally liberal.  I've experienced the economic distress of prolonged unemployment and surely understand.  I think the government should do what it can to help families retain their homes, such as the recent initiatives to facilitate refinancing at lower interest rates and to stretch out repayment timelines. 

But I draw the line at writing off principal, which is essentially just giving money to people.  I'm sorry the house has dropped in value, but it is not fair to select a privileged group and give them money, money that has to come from somewhere (either taxes or higher rates for other borrowers).

1. Why should people who bought a $100K house for $100K have to bail out people that bought a $200K house for $400K?

2. How many of these underwater mortgages are cash-outs?  If you used $50K of your home's equity to take a European vacation, that's not my (or anybody) else's problem.


The fed loaned the banks money, which the Banks then paid back.  People here are asking to have debt wiped out, i.e. a gift that doesn't have to be paid back.  I see a big difference there. 

Put me in with the others who say let people refinance and try and dig themselves back under better conditions, but don't make the taxpayers pay for the mistake.  Particularly because we would be rewarding the most reckless among us at the expense of the more responsible. 


I'm conservative generally, but I could not agree more.  I understand the neccesity of unemployment assistance within reason, and other programs designed to help those who cannot( not to be confused with "will not") help themselves.   But You have spelled it out exactly how it is.


 I don't think that the loans should be written down.

I also don't think that the banks should have been bailed out when they loaned money to people without checking to see if they had the means to pay back the loan.

Also and untold part of this story is that the underwriting guidelines for FannieMae and FreddieMac were essentially gutted under the Clinton administration, so that Fannie and Freddie had to take everything shoved their way.

I wonder how many of the homeowners are underwater due to a crash in prices and for how long have they owned that home.

So perhaps we go ahead and allow refi's where the collateral is insufficient.

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