Obama housing aide to be mortgage banking lobbyist

WASHINGTON (Reuters) - A key Obama administration housing official involved in settlement talks with mortgage lenders over questionable foreclosure practices is leaving government to run the industry's largest trade group.

Federal Housing Administration Commissioner David Stevens will take the helm at the Mortgage Bankers Association after he steps down next month, the MBA said on Tuesday.

The trade group said Stevens, who announced last week that he would leave his post sometime next month, would become its president and chief executive officer in early May. It said he would leave government on March 31.

The Mortgage Bankers Association represents more than 2,400 firms in the nation's real estate finance industry, including Bank of America (BAC.N), JPMorgan Chase (JPM.N), Citigroup (C.N) and Wells Fargo (WFC.N).

Stevens, who took office in July 2009, has been a key player in ongoing negotiations for a comprehensive settlement between U.S. authorities and banks over allegations mortgage servicing firms improperly handled foreclosure paperwork.

A group of 50 state attorneys general and more than ten federal agencies are probing bank mortgage practices that burst into public view last year, including the use of "robo-signers" to sign hundreds of unread foreclosure documents a day.

The negotiators are struggling to reach a single agreement on financial penalties and higher standards for banks handling troubled home loans.

An administration official said Stevens signed a pledge when he took office not to lobby any official for the remainder of the Obama administration and not to speak on official matters for two years with anyone from the Department of Housing and Urban Development, which houses the FHA, if he left government.

"He must - and will -- abide by this agreement," the official said, adding that Stevens also agreed not to have any contact with his new colleagues at the mortgage group while still in government.

Critics said Stevens would still have access to key officials throughout the government, including key players at the White House and the Treasury Department, even if he is not personally involved in lobbying them.

His knowledge of both the issues and the players will help the Mortgage Bankers Association navigate critical policy changes taking place in Washington.

"He is perfectly positioned to help them with that," said Bill Allison, editorial director at the Sunlight Foundation, a Washington-based organization that advocates for open government.

Stevens has overseen an agency that seen its share of the mortgage market balloon as credit tightened after the housing bubble burst. It now insures about one-third of all new home purchase loans, compared with less than 4 percent before the housing bust, according to industry publication Inside Mortgage Finance.

He was instrumental in drafting the administration's proposals on how to overhaul the $10.6 trillion U.S. mortgage market and wind down mortgage finance giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB). The administration and Congress are in the midst of what is likely to be a multi-year debate on the future of the housing finance system.

Stevens served as a senior vice president for single family loans at Freddie Mac from 1998 to 2005 and started his professional career at World Savings Bank, the famously generous mortgage lender that was ultimately acquired by Wachovia, which in turn was taken over by Wells Fargo (WFC.N).

(Reporting by Corbett B. Daly; Editing by Jan Paschal; Editing by Diane Craft)