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Obama nominates Mel Watt to head FHFA, not a joke

Mel Watt has been nominated to lead the FHFA, and while his personal story is inspiring, his political career and role in the subprime crisis put him at odds with Republicans and even many Democrats, making his confirmation unlikely, so why nominate such a divisive character?

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Mel Watt nominated to lead FHFA

President Obama has nominated Democratic Rep. Mel Watt to lead the Federal Housing Finance Agency (FHFA) which regulates Fannie Mae and Freddie Mac, after endless contention between the parties over the government’s role in housing, particularly principal forgiveness, which current FHFA Director, Ed DeMarco remains firmly against, putting him at odds with the White House, leading to many to call for his resignation.

The moment Obama’s nominee was named, it brought to mind his 2010 nomination of Joseph A. Smith, Jr. to replace DeMarco which failed miserably, as this nomination will also likely do, as the confirmation will likely be blocked by Senate Republicans.

Watt fought for civil rights, was raised in a shack

Watt wasn’t born with a silver spoon in his mouth, no, he literally grew up in a shack without electricity or plumbing, yet made it all the way to law school at Yale, a history that is impressive and worthy of respect. He worked at a major civil rights law firm right out of school, and later was a campaign manager. Also a savvy businessman, he has invested in a restaurant and hotel and owns a nursing home. Watt was elected to the state senate in the 80s, and was ultimately elected to Congress in 1992.

Democratic leader Nancy Pelosi said, “Mel Watt has never failed to fight on behalf of homeowners facing foreclosures, and he worked with Members to pass tough federal anti-predatory lending legislation in Wall Street Reform to better protect underserved Americans who are looking for a home loan. Once known as the conscience of the North Carolina Senate, he will provide a much-needed moral compass to the operations and housing interests of our financial industry.”

Pelosi added, “Elected as one of the first African Americans in over 90 years to serve North Carolina in Congress, Mel has overcome obstacles and beat back outside influence in order to fight for the best interests of his district. It is a source of pride to all of his colleagues in the House that President Obama has asked Mel to lead the FHFA and bring his tenacious spirit to the task of protecting and promoting the economic security of the middle class and the American people.”

Watt is blamed for the subprime crisis

Political columnist, Charles C. Johnson notes that “In 2002, Watt teamed up with Freddie Mac and Fannie Mae, Bank of America, BB&T, and UJAMMA Inc., to announce Pathways to Homeownership, a pilot initiative designed to give home loans to welfare recipients. A press release from Watt’s campaign office in October 2002 said that the loans to the welfare recipients would require “as little as $1,000 of the down payment to come from their own funds” and that the city of Charlotte would help borrowers obtain a “down payment subsidy” to cover the rest of the 3% down payment.”

Johnson observes that, “If approved to head up Federal Housing Finance Agency (FHFA), Watt will be regulating the very government agencies whose rules he negated in 2003.” It is noteworthy that Watt and Barney Frank were on the same page with subprime lending prior to the housing crash.

Watt at center of several controversies

Aside from the fact that this nomination is said to be a complete waste of time since it is nearly impossible that Watt will be confirmed, Watt has been and continues to be at the center of various controversies, for example, Watt supports the Stop Online Piracy Act (SOPA), mocking critics by saying that it is “beyond troubling to hear hyperbolic charges that this bill will open the floodgates to government censorship.”

Watt was found guilty of racial gerrymandering in his district in 1994 and his response to a 2009 investigation by the Office of Congressional Ethics was to slash funding for the Office, even though he was cleared of wrongdoing. Nearly a decade ago, he went head to head with Ralph Nader who demanded and never received an apology for Watt’s racist rant, allegedly stating, “You’re just another arrogant white man — telling us what we can do — it’s all about your ego — another [expletive] arrogant white man.”

In 2009, Ron Paul’s bill HR 1207 called for mandatory audits of the Federal Reserve, and in subcommittee, Watt altered the bill so substantially that all audits were essentially removed, a move which Paul said left nothing ofthe original bill. When Paul called for the bill to be restored, Chairman Barney Frank sided with Watt. The stripping of the bill was suspect as Bank of America is headquartered in Watt’s district and threatened to leave.

Most agree this nomination will never succeed

Watt is an amazing success story, but most agree that his nomination will not pass the confirmation stage, not only for the aforementioned reasons, but because the FHFA director is the most powerful person in housing, so his existing ties and policies make him unpopular on both sides of the aisle. There are even rumors that the next fall guy is already being set up for the next housing slump in the cycle.

Lastly, Watt will not likely be confirmed because as “Deep Throat” once said, all you have to do is “follow the money.”

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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2 Comments

2 Comments

  1. Ed Neuhaus

    May 6, 2013 at 3:33 pm

    oh this is exciting! Not working has even more advantages. Best of luck to this guy.

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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