* FHFA chief sees limit for Fannie, Freddie housing role
* Taxpayers funds to fortify firms, not housing market
* Critics say FHFA focuses too narrowly on firms' health
By Margaret Chadbourn
WASHINGTON, Oct 29 Fannie Mae's and
Freddie Mac's regulator on Saturday rejected
criticism he was obstructing a housing recovery by taking too
narrow a view of his mission to protect the financial health of
the two massive, taxpayer-supported mortgage firms.
Edward DeMarco, acting director of the Federal Housing
Finance Agency, argued the $141 billion in taxpayer funds
Fannie Mae and Freddie Mac had received since they were seized
by the government in 2008 were meant to get the companies back
on their feet, not to provide "broad relief" to the housing
"FHFA has been aggressively trying to assist the housing
market to ensure that the country continues to have a liquid
and stable and functioning secondary mortgage market," DeMarco
said in an interview with C-SPAN public affairs television that
was set to air on Sunday.
"Some of those things that are being advocated for us to do
really go beyond what Congress has given us the authority to do
and the funds that have been provided," he said.
Fannie Mae and Freddie Mac, the two largest sources of U.S.
mortgage finance, were placed in government conservatorship in
September 2008 as mortgage losses skyrocketed. Along with the
Federal Housing Administration, they provide the funds for 90
percent of all new mortgages.
Some Democratic lawmakers and former Obama administration
officials have taken aim at DeMarco's position on the mandate
of the two government-sponsored enterprises, or GSEs. They
argue FHFA needs to do more to halt the record pace of
foreclosures and cut loan balances for the estimated 11 million
U.S. borrowers who owe more than their homes are worth.
Lawrence Summers, a former top economic adviser to
President Barack Obama, said in a Reuters column last Sunday
that DeMarco had "taken a narrow view of the public interest"
in his efforts to protect Fannie Mae and Freddie Mac's health.
"FHFA has not acted on its conservatorship mandate to
insure that the GSEs act to stabilize the nation's housing
market, and taken no account of the reality that the narrow
financial interest of the GSEs depends on a national housing
recovery," Summers wrote.
In the interview, DeMarco touted a new initiative by his
agency to widen a federal program that offers mortgage aid to
so-called underwater borrowers.
The effort -- a retooling of the Home Affordable Refinance
Program, or HARP -- aims to make it easier for borrowers who
hold loans backed by Fannie Mae and Freddie Mac to refinance.
"Mortgage rates came down, but there was a set of borrowers
who were not able to refinance," DeMarco said. "Given the
changes we've made, we estimate that maybe at least we're
roughly doubling what we've already seen come through the
When HARP was unveiled in March 2009, the Obama
administration predicted it would help 5 million borrowers. But
so far, fewer than 895,000 have refinanced through the
DeMarco defended the steps he had taken as being well
within his "statutory authority" to oversee the two firms.
The regulator said he was now focusing on a way to sell
foreclosed properties held by Fannie Mae and Freddie Mac to
investors willing to convert them into rental properties.
"We're turning to this as the next priority," DeMarco said.
But he stood firm against suggestions the regulator open
the door to principal reductions on loans backed by Fannie Mae
and Freddie Mac.
"On a stand-alone basis, principal forgiveness doesn't
accomplish our conservator mandate relative to the loan
modifications tools and techniques that we have in place right
now," DeMarco said.
He said it was up to Congress and the administration to
decide how to restore the housing market.
"That policy debate needs to take place and we need to
await an act of Congress to give us clear direction on where
we're going forward and what the timeline for that is," he
said. "The longer this goes on, the harder it is for FHFA to
know what to do."