Prompting praise from several Massachusetts politicians and housing advocates, President Obama Wednesday nominated a new director of the Federal Housing Finance Agency.
His choice is US Representative Mel Watt, a North Carolina Democrat, former chairman of the Congressional Black Caucus, and a senior member of the House Financial Services Committee.
If the appointment is approved by Congress, Watt will replace acting FHFA director Edward J. DeMarco, who since 2009 has headed the agency that oversees mortgage giants Freddie Mac and Fannie Mae. The two companies own or guarantee about three-quarters of all residential mortgages nationwide.
DeMarco has been criticized by Massachusetts Attorney General Martha Coakley and others for failing to support mortgage principal write-downs as way to help homeowners avoid foreclosure.
The housing finance agency requires sales of foreclosed homes to be at “arm’s length,” meaning they can’t be sold back to the original borrowers. Agency officials have said the provision is meant to prevent fraud.
Coakley lauded Obama’s selection of Watt and urged Congress to quickly approve the nomination.
“For too long, Fannie Mae and Freddie Mac have been a roadblock to progress for millions of middle-class families,” she said in a statement. “President Obama is seeking a much-needed new direction at Fannie and Freddie that will benefit our nation’s homeowners and speed our economic recovery.”
DeMarco, in a statement, said he is eager to help Watt “as he prepares for his confirmation hearing and for undertaking the important work at FHFA.” DeMarco was named interim chief of the agency in 2009 and stayed on after Obama’s pick as permanent head failed to win the backing of Congress.
Lewis Finfer, director of the nonprofit Massachusetts Communities Action Network, said he is pleased that Obama is moving to replace DeMarco, whom housing advocates have long considered a hindrance to helping homeowners in financial trouble. Finfer said he is hopeful Watt will be an improvement, but isn’t familiar with his position on mortgage principal reduction.
“We need someone who gets these issues and wants to do something and cares about homeowners and average people,’’ he said.
Massachusetts Senator Elizabeth Warren also praised Obama’s choice. She urged the administration to immediately remove DeMarco while the approval process is underway.
“Under DeMarco’s leadership, the FHFA has refused repeatedly — often with cold indifference — to work with families struggling to save their homes,” said Warren, a Democrat. “It is time for change.”
But it’s likely Watt’s confirmation will face opposition.
Senator Bob Corker, a Republican from Tennessee, said he was disappointed by the nomination. He said the Obama administration needs to explain how it would dismantle Fannie Mae and Freddie Mac, which have been under federal control since they were seized in 2008 amid crushing financial losses.
“Before any nominee should be considered for this post, regardless of their qualifications, the administration should explicitly lay out how they will unwind these entities,” Corker said.
At a press briefing, Obama said that Watt, who has served two decades in Congress, has long been involved in housing policy, fighting predatory mortgage lenders, and pushing for affordable housing.
“Mel understands as well as anybody what caused the housing crisis,” the president said. “He knows what it’s going to take to help responsible homeowners fully recover.”