DeMarco Out? Rumors say Director Appointment Imminent

President Obama has picked a replacement for acting FederalrnHousing Finance Agency (FHFA) director Edward J. DeMarco according to multiple news outlets, citing an “administration official.”  The nomination of Mel Watt, a long-timerncongressman from North Carolina, may be announced as early as today.</p

Watt is 68 and a native of Mecklenburg County, NorthrnCarolina.  He was a Phi Beta Kapparngraduate of UNC Chapel Hill and received a JD degree from Yale University LawrnSchool where he was a member of the Law Journal.  He was elected to Congress representing NC-12rnin 1992 and, among other assignments, serves on the House Financial ServicesrnCommittee. </p

Watt will be the second person President Obama has nominatedrnto fill the FHFA seat.  Joseph Smith,rnNorth Carolina’s banking commissioner, was named in 2009 but Republicans in thernSenate refused to allow an up or down vote on the nomination.  DeMarco, a hold-over from the BushrnAdministration, became acting director when James B. Lockhart resigned.  </p

Watt’s nomination may face problems as well.  FHFA is regulator and conservator of FanniernMae and Freddie Mac (the GSEs) and Republicans and Democrats are at odds overrnhow to best proceed in restructuring the nation’s housing finance system andrnthe government’s role in it, resolving the GSE  conservatorship, and the extent of therngovernment’s involvement in ending the ongoing epidemic of foreclosures.  </p

The possible nomination of Watts comes after months ofrndemands from Democratic members of the House Financial Services Committee andrnmultiple state attorney’s general that the President replace DeMarco.  The Acting Director has been especiallyrncontroversial because of his refusal to allow the GSEs to reduce the principalrnbalances of distressed mortgages as part of their loan modifications.  Principal reduction is one of the tools usedrnin the private sector but despite both political pressure and offers ofrnincentives from the Treasury Department DeMarco has refused to budge on thernissue.</p

Even though Watts’ nomination is not official, the NationalrnAssociation of Home Builders (NAHB) has released a statement in itsrnsupport.  NAHB Chairman Rick Judson said,rn”We applaud the nomination of Representative Watt to this importantrnposition. After four years in conservatorship, the future of Fannie Mae andrnFreddie Mac stand at a crossroad.<br /<br /"Rep. Watt brings years of experience to this position at a pivotal momentrnas our nation's housing market recovers. NAHB looks forward to working closelyrnwith Rep. Watt to help address the many complex challenges facing the U.S.rnhousing finance system upon his confirmation by the U.S. Senate," Judsonrnsaid.

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