The recent liberal campaign against housing regulator Edward DeMarco has provoked some housing-watchers to rush to his defense. Reuters columnists Agnes Crane and Daniel Indiviglio say his arguments against principal reduction make sense:

But this contention ignores an important rejoinder from DeMarco: Other modification strategies such as repayment holidays and lower interest payments work nearly as well without forcing Fannie and Freddie to take a hit on the loan amount — that only happens if modifying a mortgage isn’t enough to prevent a borrower from defaulting.

And the vast majority of underwater loans — where the value of the house is less than the amount of the outstanding mortgage loan — do not end up in default. As of June last year, according to DeMarco, 80 percent of Frannie borrowers with negative equity in their homes whose loans were backed by the agencies were current on their mortgages. Blanket principal reductions would cause losses on all of them.

Critics are also ignoring DeMarco’s mandate to minimize losses from bailing out the two mortgage agencies. By attacking him, they are trying to force him to put struggling homeowners’ needs ahead of all taxpayers.

The anti-DeMarco campaign has also attracted criticism from the left: Firedoglake’s David Dayen says that the Federal Housing Finance Agency chief isn’t “the villain that liberals are making him out to be” and that the narrow focus on DeMarco is misguided.