Law Office of Allan E. Dunaway, PLC

State AGs ask for removal of FHFA head

There is a reason why the mortgage crisis 2008 is referred to as a "bubble." If you look at a graph of the real estate valuations of virtually any property over the last ten years, there is a large rise in the middle, generally centering on 2005-2007. For anyone who purchased property during this time, you experienced a rapid increase in prices, any you may have been outbid when you made an offer on home.

Of course, today, your valuation on that home may be far below that peak. Unfortunately, for you, your mortgage was based on that phony, inflated peak. The dual collapse of the real estate and banking sectors destroyed hundreds of thousands of jobs and plunged the economy into a deep depression that forced millions of borrowers into bankruptcy.

In the aftermath, state attorney generals have been dealing with the fraud that occurred by the banks and other financial institutions. They recently asked that the head of the Federal Housing Finance Agency be removed.

They said in a statement, "Unfortunately, under the leadership of Acting FHFA Director Edward DeMarco, Fannie Mae and Freddie Mac remain an obstacle to progress by refusing to adopt policies that will help maximize relief for homeowners."

Because of this failure to recognize the reality that these homes never were worth the mortgage valuations, and that the banks, by manipulating the mortgage securities market, were directly responsible for the fraud of the housing bubble, the FHFA's policies leave many people struggling with underwater mortgages on homes that may never appreciate to the loan amount.

For borrowers who cannot obtain principal reductions from a financial institution should speak with a bankruptcy attorney to determine if they would be better of walking away from the property and then file for bankruptcy protection.

Source: Los Angeles Times, "9 state attorneys general want housing official DeMarco replaced," Jim Puzzanghera, March 19, 2013

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