Monday, October 28, 2013

UPDATE: Our Last Hope? New Head of Federal Housing Finance Agency


U.S. Representative Mel Watt, from Charlotte, NC - President Obama's nominee (last May) to head the Federal Housing Finance Agency - is probably our last hope for some relief from our half decade struggle to hang onto our homes.

Adam O'Daniel, writing for the  The Charlotte Business Journal, reported a couple months ago that HUD Secretary Shaun Donovan - who spoke at the N.C. Bankers Association’s American Mortgage Conference - told the attendees that it is time to wind down mortgage giants Fannie Mae and Freddie Mac (under control of the federal government since September 2008), and asked that private dollars be used to support more of the mortgage market and launch a new federal entity to replace Fannie and Freddie. 

Secretary Donovan stated at the conference that lawmakers have a chance this fall to reform the nation's housing and mortgage system, and he pushed for mortgage bankers and lobbyists to support President Obama's four principles for the future of government  housing policy (i.e., • Usher private capital back to the center of the system. (Fannie and Freddie have purchased 90% of the mortgage market paper since the Great Recession.) • Replace and slowly over time wind down Fannie Mae and Freddie Mac.  • Preserve a system that provides 30-year home financing for safe, responsible borrowers.  • Provide a system that offers opportunity to low- and moderate-income borrowers.

Republicans are critical of Rep. Watt, fearing he will promote principal reduction and the easing of mortgage standards, putting the American taxpayer and homeowner at risk all over again.  Isn't that what is needed?  Struggling homeowners, most of whom have been paying their mortgages at great sacrifice and facing losing their homes because of the downturn in the housing industry, need a little relief from a situation they are not entirely responsible for.  Helping us would not put the American taxpayer or homeowners at risk all over again.  In fact, a little relief would benefit the overall economy by putting more money back into it once our mortgages have been adjusted, in part, through principal reduction.  I am sure I'm not the only homeowner paying half or two-thirds of my income toward housing.

The U.S. Senate is now set to vote on the confirmation of  Representative Watt to lead the FHFA.  President Obama, at the time of the nomination, praised Rep. Watt for his effort to rein in "unscrupulous mortgage lenders".  As expected, many Republican legislators do not agree with the President’s assessment of Watt as the right person for the job at the right time.

On July 18, the Senate Banking Committee approved Watt’s nomination by a vote of 12-10, which was split along party lines. Watt will need the support of at least 6 Republicans to gain the 60 votes needed for the Senate to take up his official confirmation. As of now, Richard Burr (R-NC) is the only Republican who has endorsed Watt so far.

After the recent fiasco in Washington, D..C. (government shutdown, debate over raising debt ceiling, etc.), Americans are tired of the acrimony and obstructionist tactics by the right, and many are beginning to leave their centrist position and lean more to the left.  I'm one of them.

UPDATE:  Oct. 31, 2013:  Senate Republicans blocked Watt's nomination.  Out of the 60 ayes needed, the nominee received 56.  For full story, see today's Wall Street Journal blog: 

UPDATE:  Nov. 21, 2013.  The U.S. Senate voted today to change the filibuster rules in a 52-48 vote, a simple majority.  This means President Obama's two judicial nominees and one executive nominee (Mel Watts to head the FHFA) will go forward.  The last time filibuster rules were changed was in 1975.

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