The Obama administration is intent on nominating a new director for the Federal Housing Finance Agency to replace Edward J. DeMarco, the agency’s acting director who has blocked principal reduction efforts for underwater borrowers, The Wall Street Journal reported Dec. 10.
The position has become politically significant since the FHFA controls housing policy as it relates to Fannie Mae and Freddie Mac, both of which own or guarantee more than 50 percent of all U.S. mortgages.
While DeMarco has occupied the position of interim director for the past three years, he has never been confirmed by the Senate, and sources close to the White House told the Journal that the President would not nominate DeMarco for directorship despite his interest in retaining the position.
The Journal reported that there’s been chatter about a recess appointment in order to bypass Senate confirmation, but it’s unlikely the White House would gamble on angering Republican lawmakers whose cooperation is needed for the confirmation of the Secretary of the Treasury, the Secretary of State and the Chairman of the U.S. Securities and Exchange Commission.
Leading candidates include Susan Wachter, a professor of real estate finance at the University of Pennsylvania’s Wharton School, and Michael Stegman, an advisor to Treasury Secretary Timothy Geithner, the Journal reported.
The White House and DeMarco have been at odds over the FHFA’s refusal to launch principal reduction programs at Fannie and Freddie; DeMarco has maintained it’s his obligation to protect the assets of the government-sponsored enterprises and therefore has eschewed policies with high upfront costs and no clear future benefits.
If the Obama administration succeeds in replacing DeMarco, refinancing programs for underwater borrowers could be greatly expanded over the next few years.