BLOG VIEW: Will Rogers once famously remarked, ‘All I know is just what I read in the papers, and that's an alibi for my ignorance.’ He was joking, of course, but some of the mainstream media coverage of last week's bizarre public spat between two Democrats in the House of Representatives and the head of the Federal Housing Finance Agency (FHFA) could easily be blamed for any potential public ignorance on a very serious matter.
In case you missed it, here's what happened. Last week, Reps. Elijah Cummings, D-Md., and John Tierney, D-Mass., sent a letter to FHFA Acting Director Edward DeMarco that accused him of canceling a 2009 pilot program at Fannie Mae that would have tested principal reduction and then withholding information that the program existed.
Cummings and Tierney said they learned about the canceled pilot program through confidential FHFA documents that they somehow obtained – just how they obtained these documents isn't quite clear – and added that DeMarco's decision to kibosh the pilot program was a "conscious choice that appears to have been based on ideology rather than on Fannie Mae's own data and analyses."
Now, let's assume that John Q. Public is at home and taking a leisurely spin through Google News as a means of getting up to speed on the day's events. This person may be unfamiliar with the FHFA and DeMarco – unless you're a ravenous news junkie, it is easy to not be aware of these subjects.
Clearly, this particular news story is fairly complex, and it is not very easy to summarize in the relatively tight parameters of a headline. However, some of the more prominent news organizations that covered Cummings' and Tierney's accusations were either barely acquainted with the actual story or were more interested in grinding partisan axes than reporting the news objectively.
For example, a Los Angeles Times headline read, "Calls for mortgage assistance get louder in Washington." Whether the decibel volume is being jacked up is debatable – only two members of Congress were rattling their oratorical swords, and no one else chimed in to support them.
As for "assistance," I would question whether the financial institutions that loaned the money and the investors who put their funds into securities backed by these loans would feel they're getting any assistance to recover the millions of dollars they've lost because people are not repaying their home loans.
The New York Times headline was more slippery. That headline read, "Mortgage Aid Programs Were Halted, Papers Show." Oddly, neither the headline nor the accompanying article mentions that the endeavor in question was a small-scale pilot program that took place three years ago.
The Christian Science Monitor headline read, "Forgiving mortgage loans would save taxpayers money, say Fannie Mae papers." Actually, Monitor's article contradicts the headline: It notes that Fannie Mae budgeted the pilot program at $1.7 million, but its ‘benefits could total more than $410 million.’ This may sound nitpicky, but there is a difference between something that "could" turn a profit and something that "would" turn a profit.
The Huffington Post headline read, "Housing Finance Boss Blocked Principal Reductions, Hid Data Showing They Work, Dems Allege." Not coincidentally, that's quite a long headline – a little too long for Google, which truncated it so its Google News presentation reads, "Housing Finance Boss Blocked Principal Reductions, Hid Data Showing They Workâ�¦" – and the absence of "Dems Allege" makes the headline into an objective condemnation.
And while this incident might qualify as a dramatic story, the Wall Street Journal headline got a little carried away. That headline read, "Plot Thickens on Mortgage Write-Down Debate." Yeah, all that's missing there is Angela Lansbury examining a corpse with a magnifying glass.
Thus, anyone who relies strictly on glancing at headlines for information will get the false impression that the FHFA is a corrupt agency that is ruining the country by not permitting mortgage write-downs. Rather than spreading information, these headlines encourage easy ignorance of the complicated fates. And as the aforementioned Will Rogers noted, "When ignorance gets started, it knows no bounds."
– Phil Hall, editor, MortgageOrb
(Please address all comments regarding this opinion column to hallp@mortgageorb.com.)
