Housing Secretary Donovan to stay on for second term

WASHINGTON (Reuters) - Housing and Urban Development Secretary Shaun Donovan will continue in his current role for a second term under President Barack Obama, an agency spokesman said on Wednesday.

Donovan, who was New York City's housing commissioner before taking the top housing post in 2009, is expected to play a central role in the Obama administration's efforts to keep the Federal Housing Administration solvent.

The FHA, which falls under HUD's umbrella, is facing a projected $16.3 billion capital shortfall and may need a taxpayer bailout for the first time in its 79-year history.

Donovan, 46, was a chief negotiator in the historic $25 billion settlement reached a year ago with the nation's five biggest banks and 49 state attorneys general to end a probe of abusive lending practices stemming from the housing bubble.

Shortly after his re-election, Obama appointed Donovan to lead rebuilding efforts in areas that suffered damage by Superstorm Sandy, which ravaged the East Coast in late October.

He was widely expected to stay on.

During Donovan's second term, administration officials and lawmakers in Washington are expected to draw up more concrete plans on the government's future role in the mortgage market, including the fate of housing giants Fannie Mae and Freddie Mac.

The government seized control of Fannie Mae and Freddie Mac at the height of the financial crisis in 2008 as mortgage losses mounted.

(Reporting By Margaret Chadbourn, editing by Stacey Joyce)