Watt does it matter?

If you follow mortgage news and the Washington DC news, you’ve undoubtedly seen that there is another political battle underway in regards to housing finance. That shouldn’t surprise you. The Democrats and Republicans can barely agree what day of the week it is, let alone anything that has any importance. The battle is over the next Director of the Federal Housing Finance Agency (FHFA).

FHFA is the powerful agency that oversees Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The mission of FHFA is to ensure that the housing GSEs operate in a safe and sound manner so that they serve as a reliable source of liquidity and funding for housing finance and community investment.

Edward DeMarco has been the Acting Director of the agency since 2009. And many don’t like the way he is acting. DeMarco believes the FHFA role is to minimize taxpayer losses from the GSEs. He has been extremely unpopular among many groups primarily because he refuses to have Fannie & Freddie allow principal reductions/forgiveness for homeowners who are owe more on their home than it is worth.

So the President has nominated Congressman Mel Watt to be the director. At a confirmation hearing last week, his nomination was defeated primarily on party lines. This shouldn’t surprise anyone because it happened in DC, but should Credit Unions even care who ends up being the Director of FHFA?

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