24th April 2013

DeMarco Presses for Action on Mortgage Reform

posted in Appraiser News |

Edward DeMarco, acting director of the Federal Housing Finance Agency, told the Senate Banking Committee April 18 that Congress must act in order to bring private capital back into the housing market, a move he has been urging for years, National Mortgage News reported.

Fannie Mae and Freddie Mac cannot complete the transitions needed to encourage more private investment in the mortgage market until Congress makes a concrete plan, DeMarco told lawmakers.

“I think that with a $10 trillion single-family mortgage market, the government doesn’t belong at zero or at 10. It belongs somewhere in between,” DeMarco told lawmakers, National Mortgage News reported. He further said he believed that the government could and should play a role in setting standards, rules and transparency guidelines, which would go a long way toward facilitating an effective role for private capital in funding and bearing the credit risk in the mortgage market.

DeMarco also thanked lawmakers for stopping the use of agency guarantee fees to offset government spending in unrelated areas. “By indicating that the Congress of the United States has agreed it does not want to use Fannie and Freddie to be funding part of the government, it then removes that as an issue or a barrier to actually doing something to bring these conservatorships to an end and rebuild the housing finance system. I think the markets would take that very seriously,” he said, National Mortgage News reported.

He also advised against having the U.S. Department of the Treasury sell off preferred shares of the government-sponsored enterprises. “I think it would certainly generate confusion and questions in the mortgage market about the role that private capital would have in the future if there was a thought that there was some sort of reconstituting Fannie and Freddie as they have been, with the charters they had,” he said, National Mortgage News reported.

In response to committee questions about the role that community banks would play in the mortgage market with the FHFA’s new single securitization platform, DeMarco said the agency is working to get data standards and electronic reporting standards in place that would work with the whole market. He said an industry standard would make it easier for a community bank to acquire technology from a vendor and be able to put it in their institution — even a very small institution.

Even as DeMarco testified, rumors have surfaced that he likely will be replaced as acting director, a role he has held since 2009. DeMarco repeatedly has resisted Obama administration efforts to institute principal reduction programs at the GSEs, National Mortgage News reported. Top candidates for replacing DeMarco are said to be Rep. Mel Watt, D-N.C., and economist Mark Zandi.

Reposted from Appraiser News Online.

Leave a Reply

You must be logged in to post a comment.

3 Steps to get
More AMC Orders
We hate spam just as much as you do. If not more!