NEW YORK (Legal Newsline) -- New York Attorney General Eric Schneiderman, in an op-ed published Wednesday, called for the immediate removal of Edward DeMarco, the acting director of the Federal Housing Finance Authority.
Last week, President Barack Obama announced he plans to nominate a new, permanent director of the agency, which manages Fannie Mae and Freddie Mac following the 2008 financial crisis. His pick: U.S. Rep. Melvin Watt, D-N.C.
Watt has served as a Congressman since 1993 and has served for all of his 20 years as a member of the House Financial Services Committee, which oversees housing policy.
Schneiderman, in an op-ed in the New York Daily News, commended Obama on the selection of Watt but said further action was needed, "right away," to provide "swift and fair relief" that homeowners need.
The attorney general, who, along with other state attorneys general, has called for DeMarco's removal in recent months, argues that DeMarco can be gotten rid of now.
He said he can be replaced as acting director by one of the FHFA's three deputy directors immediately.
"President Obama's nomination last week of Rep. Mel Watt as permanent director signals that he's ready for a confirmation fight that should result in better housing policy," Schneiderman wrote. "But the outcome of that fight is far from certain. And even if the President succeeds, how long will it take, and how many more homeowners will lose their homes, before Watt takes office?"
It was DeMarco who killed an initiative the Obama administration proposed expanding principal write-downs for Fannie Mae and Freddie Mac-owned mortgages, Schneiderman said.
Principal reduction is a form of loan forgiveness that would help "underwater" borrowers whose mortgages are worth more than their homes.
"His obstruction came at great cost to millions of homeowners and to the housing market, generally: According to the Congressional Budget Office, approximately 1.2 million homeowners with Fannie and Freddie mortgages are in need of principal reduction. That's roughly 40 percent of all underwater homeowners in the United States," the attorney general wrote. "So why is this man, who was appointed as a Federal Housing Finance Agency deputy director by President George W. Bush, still wielding so much power as head of this important agency?
"The answer, like so much of Washington's dysfunction these days, lies in Congress. Two years ago, Senate Republicans made it clear they would block the confirmation of a new, permanent head of the agency in order to preserve DeMarco's power and policies."
Schneiderman said with a new acting director, the FHFA can quickly move to "stanch the bleeding" and bring relief to struggling homeowners.
"Meanwhile, Senate Republicans would no longer have reason to hold up Watt's nomination," he wrote. "The President will have taken their leverage away and ensured responsible leadership for the agency."
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