With the Obama administration nominating Mel Watt to run the FHFA many members of the public still are unaware of this agency, its purpose, its mission, and the firestorm of controversy it has been at the heart of since 2008.
The Federal Home Finance Agency (FHFA) is the conservator, or caretaker, of the mortgage funding giants Fannie Mae and Freddie Mac. Ed Demarco, a lifelong civil servant, has been acting director of the agency since no other nominee has been able to pass Congressional scrutiny.
Demarco has angered many by refusing to allow loans owned by Fannie and Freddie to be “written down”.
He has also spearheaded the creation of a new system of funding mortgage loans, with private money invested in a “first loss” position alongside public dollars.
In a recent discussion about the future of mortgage finance in the U.S. participants discussed the form this might take, and despite the calls by some in Congress for the Federal government to get out of the loan business it is clear that there is simply not enough private capital out there to fully fund a healthy U.S. housing market, and the public control of this funding is needed to assure the public and investors that we will not see a massive bubble as we experienced before.
Source: Nat’l Mortgage Pro