Since the start of the 2008 recession, an estimated 10 million American households have been foreclosed, evicted, or displaced and millions more are still at risk.¹ The brutal housing crisis hit Black people especially hard,² but now there’s a new opportunity to roll back years of destructive federal housing policy, repair the housing finance market, and help struggling homeowners stay in their homes.

Former North Carolina Congressman Mel Watt was recently confirmed as a top federal housing regulator and director of the Federal Housing Finance Agency (FHFA). He could help millions of households avoid unnecessary foreclosures by lifting the FHFA’s restriction on a loan modification process known as “principal reduction,”³ — lowering the amount owed to current market value to decrease monthly payments.⁴ This would stabilize local economies by putting millions of dollars back into the hands of homeowners, giving cities more reliable property tax revenues, and ensuring lenders have fewer delinquent loans. But he won’t act unless enough of us raise our voices and demand that he make it a priority.

Please join us in demanding FHFA Director Mel Watt suspend all evictions and foreclosures by Fannie Mae and Freddie Mac until his administration reviews and changes key policies, including lifting the Federal Housing Finance Agency’s restriction on principal reduction. It only takes a moment.

Since the start of the housing crisis, Black households have lost 53 percent of their wealth,⁵ retirement accounts have shrunk,⁶ and the worst underwater areas continue to be disproportionately located in Black communities. The FHFA was created in 2008 to help homeowners and stabilize the real estate market and the economy — but it has done little to help. Instead the agency has consistently refused to let government-backed lenders Fannie Mae and Freddie Mac reduce the principal owed on homes weighed down by “underwater” mortgages,⁷ meaning they now owe more on their mortgages than their homes are worth. If Fannie and Freddie were authorized to make loan modifications such as principal reduction, homeowners could expect lower monthly mortgage payments, making it far more likely that they could avoid foreclosure and eviction.⁸ At least 8 state Attorneys General and 45 Members of the House of Representatives have called for principal reduction and harshly criticized the FHFA’s inaction.⁹

Before his appointment as director of the FHFA, Watt served as a North Carolina congressman for more than two decades, where he tirelessly advocated for struggling homeowners, co-sponsored mortgage reform and anti-predatory lending legislation and promoted affordable housing. Watt was also a member of the Congressional Black Caucus (CBC), serving as the group’s chairman from 2005-2006.¹⁰ In fact, in 2012 Watt was among a group of CBC members and other progressive lawmakers that sent President Barack Obama a letter urging him to enact principal reduction and provide assistance to underwater borrowers.¹¹ Now that he has the power to mitigate widespread suffering in Black communities caused by the housing crisis, we must remind him of his past support for principal reduction and that failure to take action will stain his legacy.

Mel Watt is uniquely positioned to take bold action to address the nation’s underwater mortgage epidemic — and he doesn’t even need Congressional approval to act.¹² But in his first major speech since his appointment, Watt made no commitment and he only indicated that the FHFA was “studying principal reduction right now” in response to a direct question.¹³ Without intervention from the FHFA and Mel Watt, we will continue to see our communities blighted, unable to recover, and suffering devastating economic impacts from this unchecked foreclosure crisis.¹⁴

Join us in demanding FHFA Director Mel Watt issue a moratorium on foreclosures and evictions, lift the restriction on principal reduction, keep families in their homes and end unnecessary suffering in our communities. And when you do, please ask your friends and family to do the same.

Thanks and Peace,

–Rashad, Matt, Arisha, Aimée, Jamar and the rest of the ColorOfChange.org team
May 28th, 2014

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References

1. “10 Million Americans Have Had Their Homes Taken Away by the Banks — Often at the Point of a Gun,” AlterNet, 08-01-13
http://act.colorofchange.org/go/3479?t=7&akid=3412.1174326.jGfCGm

2. “The Great Eviction: Black America and the Toll of the Foreclosure Crisis,” Mother Jones, 08-01-13
http://act.colorofchange.org/go/3481?t=9&akid=3412.1174326.jGfCGm

3. “What Is Mel Watt Waiting For?,” Huffington Post, 05-13-14
http://act.colorofchange.org/go/3482?t=11&akid=3412.1174326.jGfCGm

4. “What Housing Recovery?,” New York Times, 5-8-14
http://act.colorofchange.org/go/3485?t=13&akid=3412.1174326.jGfCGm

5. “Wealth Gaps Rise to Record Highs Between Whites, Blacks, Hispanics,” Pew Research, 07-26-11
http://act.colorofchange.org/go/3497?t=15&akid=3412.1174326.jGfCGm

6. “Foreclosure crisis not over for minorities,” CBS News, 06-25-13
http://act.colorofchange.org/go/3496?t=17&akid=3412.1174326.jGfCGm

7. “Liberal advocates want Obama to dump FHFA’s DeMarco,” Washington Post, 03-12-12
http://act.colorofchange.org/go/3483?t=19&akid=3412.1174326.jGfCGm

8. “A Major Lift for Fannie and Freddie,” NY Times, 05-13-14
http://act.colorofchange.org/go/3484?t=21&akid=3412.1174326.jGfCGm

9. See reference 3.

10. “Obama to Nominate Mel Watt to Head FHFA,” The Root, 05-01-13
http://act.colorofchange.org/go/3489?t=23&akid=3412.1174326.jGfCGm

11. “House Democrats press for homeowner help in ‘fiscal cliff’ deal,” The Hill, 02-11-12
http://act.colorofchange.org/go/3490?t=25&akid=3412.1174326.jGfCGm

12. “What Housing Recovery?,” NY Times, 05-08-14
http://act.colorofchange.org/go/3485?t=27&akid=3412.1174326.jGfCGm

13. “Fannie Mae, Freddie Mac won’t reduce loan limits, regulator says,” LA Times, 05-13-14
http://act.colorofchange.org/go/3487?t=29&akid=3412.1174326.jGfCGm

14. “Underwater America: How the So-Called Housing ‘Recovery’ Is Bypassing Many American Communities,” (.pdf), The Haas Institute for a Fair and Inclusive Society, 05-01-14
http://act.colorofchange.org/go/3498?t=31&akid=3412.1174326.jGfCGm