Elijah Cummings gets help in Edward DeMarco fight

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Ed DeMarco heads to a closed door meeting with Elijah Cummings on Capitol Hill on Oct. 26, 2011. | Jay Westcott/POLITICO

A host of influential Democratic politicians piled on DeMarco to yield or quit. | Jay Westcott/POLITICO

Rep. Elijah Cummings’s fight to help struggling homeowners has new allies: officials from across the country and within President Barack Obama’s own Cabinet, helping him turn up the pressure on Edward DeMarco, the overseer of government-backed mortgage giants Fannie Mae and Freddie Mac.

And the outcome could significantly shape up the White House’s admittedly spotty record on the housing crisis. The stakes are high: As the housing market goes, so goes the economy, and the 2012 presidential election expected to turn largely on whether voters believe Obama has turned things around.

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For months, Cummings has been demanding DeMarco offer debt reduction for homeowners struggling to pay their mortgages, only to be rebuffed by the argument from the Federal Housing Finance Agency conservator that this could endanger the ability of Fannie and Freddie to stay solvent and avoid another $130 billion government bailout.

But now, with a range of supporters that includes California Attorney General Kamala Harris and Housing Secretary Shaun Donovan, the Baltimore Democrat is aiming to beat DeMarco’s resistance to principal reduction — a refinancing strategy that involves Fannie and Freddie forgiving part of a homeowner’s debt.

“He and he alone stands in the way of hundreds of thousands of people, if not millions, being able to [literally] get a new lease on life,” Cummings told POLITICO in a recent interview.

After three years of inconsistent success and revamped, high-profile programs, the president himself has admitted he’s fallen short of his 2009 goal of helping 7 million struggling or underwater homeowners — administration officials publicly acknowledge they’ve gotten only halfway there.

The lack of progress on housing remains a major threat to the economy, despite the upswing of other economic indicators. Even as national unemployment declined last month, joblessness among home construction workers edged toward 18 percent, twice the national average. At the same time, market analyst RealtyTrac predicts home foreclosures will accelerate through summer, and the Case-Shiller economic survey showed home prices in the nation’s biggest markets fell for a third consecutive month.

Meanwhile, Cummings, a former defense lawyer who nearly lost his own home to foreclosure years ago, has fought against the wave of foreclosures and used his power as ranking member on the Committee on Oversight and Government Reform to investigate irregularities like risky high-interest loans in the industry.

Cummings has kept DeMarco in his sights throughout. In hearing after hearing, Cummings has challenged DeMarco to come clean about his opposition to the principal reduction strategy, and last month asked him to explain why the FHFA in early 2010 teamed with a mortgage bank to quietly start a pilot project on principal reduction — then killed it just weeks before the midterm elections when House Republicans swept to power.

In a stinging letter co-signed by Rep. John Tierney (D-Mass.) in February, Cummings took DeMarco to task for “troubling reports” that FHFA is continuing to block Fannie Mae and Freddie Mac from joining principal reduction programs implemented as part of the multistate, $27 billion “robo-signing” settlement the White House announced last month. He also demanded DeMarco bring him any and all email, documents and research FHFA has on principal reduction and the pilot program.

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