Housing Chief Should See Upside of Forgiving Debts: View

Edward DeMarco, acting director of the Federal Housing Finance Agency, was back on Capitol Hill this week explaining to lawmakers why he can’t -- or won’t -- allow mortgage giants Fannie Mae and Freddie Mac to forgive the debts of homeowners at risk of defaulting on their loans.

DeMarco argues that debt forgiveness goes beyond his authority and would result in untenable losses for the mortgage giants. This is a curious position given that he is a presidential appointee and everyone from President Barack Obama to lawmakers to Federal Reserve Chairman Ben S. Bernanke has called on him to go ahead and do it. Economists and housing analysts say debt relief is essential to preventing a death spiral in which rising foreclosures and falling housing prices reinforce each other.