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  • You probably have never heard his name, but if you are having trouble paying your mortgage maybe it is time you learn more about this little known bureaucrat who is creating huge ripples in the mortgage industry.

    We are talking about Edward J. DeMarco, the regulator of Fannie Maeand Freddie Mac. He may not appear on the nine o’clock news but DeMarco is one of the most, if not the most, influential individual in the refinance and loan modification industry Why? Simple. Fannie Mae and Freddie Mac own or insure 60 percent of all American mortgages. This means Fannie Mae and Freddie Mac have the power to grant or encourage the approval for six out of every ten refinance applications. In fact, this is an understatement. Due to their influence in the housing market and their effect on the insurance rates of mortgages, Fannie and Freddie influence the policies that all mortgage providers follow when determining the eligibility of homeowners for mortgage refinances.

    But who is Edward J. DeMarco and where does he stand on the issue of mortgage refinance?

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    Depending on who you ask DeMarco is babbling idiot or a hero Rep. Zoe Lofgren, D-Calif. is quoted as saying: Here’s some random idiot who ends up in charge of this agency, who is doing actual damage to the housing industry and its constitutents. On the other hand, Jaret Seiberg, a senior analyst for Guggenheim Partners believes he’s the bravest guy in D.C. agree with him or disagree with him, you’ve got to respect him.

    Why the extreme views? The main reason is the issue of mortgage write-downs. For a long time the Obama administration has been doing its best to push DeMarco toward pressuring banks and other lenders to reduce the balance owed on mortgages as a way of helping underwater homeowners. According to certain economists a reduction in mortgage balances is the best way to stem the tide of foreclosures.

    Republicans don’t agree with that view and feel the additional risk to taxpayers would be unwarranted. In fact, for many conservative analysts DeMarco is not doing enough to protect taxpayers and should close down Fannie Mae and Freddie Mac.

    Democrats tend to feel DeMarco is favoring big business and not pushing lenders toward more generous and efficient mortgage refinance terms, especially in the case of underwater mortgages. Learn in our next post how the forgiving of portions of underwater mortgages helps both owners and lenders.

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