For some time, Obama has been pressured to name a permanent leader for the Federal Housing Finance Agency (FHFA) as the countdown for reform ticks down. The choice for FHFA Director comes with heavy implications as whoever takes the role will be a major player in the future of the housing sector.
The FHFA oversees Fannie Mae and Freddie Mac which together hold over 50% of all American mortgages. The Treasury Department has provided $151 billion in aid to Fannie and Freddie and since Uncle Sam took over the two finance giants in 2008 under the leadership of Edward DeMarco, it has been through the ringer with opinions on the way forward varying from Barney Frank’s proposal to completely dissolve Fannie and Freddie to others’ proposals to streamline the system.
The FHFA is set to present a plan to overhaul the US mortgage-finance system in January 2011. The clock is ticking.
Obama’s nominee, Joseph A. Smith, Jr.
In steps Obama’s current nominee for FHFA Director, Joseph A. Smith, Jr. who is the current North Carolina Banking Commissioner. With his University of Virginia law degree, Smith has spent his career as a banking lawyer until 2002 when he became the Banking Commissioner, overseeing mortgage firms, banks and consumer lenders in North Carolina. Smith is praised by banks and consumers for pioneering a foreclosure-prevention program.
“Smith brings to this position both tremendous expertise and a deep commitment to strengthening our housing finance system for the American people,” Obama said in a statement this week. “I’m grateful that he has accepted this nomination, and I look forward to working with him in the months and years to come.”
North Carolina is well known for being consumer-centric regarding lending and despite his deep roots in the banking industry, Smith is heralded as a consumer advocate. In his own words to the Senate Banking Committee in 2007, “We must find a balance between encouraging market innovation, product choice and credit availability with consumer protection.”
Will this nomination help or hurt the real estate sector?
Will an Uncle Sam overhaul of Fannie and Freddie with the consumer in mind give some relief to a still flailing real estate sector, will it keep the market stagnant, or will a non-iron fist cause a decline? We believe that Obama’s nomination spells improvement for the sector as politicians have scrambled to get their local interests served under weak leadership, but a consumer advocate like Smith is likely not adverse to criticism by politicians. Regardless of politics, this appears to be a solid, sound nominee which could be exactly what our mortgage finance system needs.