"We believe it is underappreciated how difficult it is to replace the head of FHFA," Mills wrote the day after President Obama won the election. "The statute establishing the agency requires any vacancy to be filled internally, all from positions held by individuals philosophically similar to DeMarco. The President can attempt to appoint a new director, but that requires Senate approval - something that will be difficult with Senate Republicans still with enough votes to block confirmations. A recess appointment is possible, but we have not had an official congressional recess in almost 2-years. The recess appointment of Richard Cordray to head the CFPB was different in that there was a vacancy, which does not exist here," Mills wrote.
Even if DeMarco is replaced, any new director would be limited by the charter governing FHFA oversight of government sponsored enterprises
, according to Poggi. He contends the charter would have to be changed "before anything more material could likely be accomplished," to further spur refinancing, and that such a change "would take significant time."
Finally, Poggi argues the Obama Administration will be reluctant to tinker further with HARP. While the first revision of HARP (widely referred to as HARP 2.0) was a success, a second revision would likely spur MBS investors to demand higher coupons to compensate them for "the risk of constant government intervention."
Refinancing in 2012 is expected to total $1.2 trillion--a 28% jump from 2011,
according to Oct. 24 forecasts from the Mortgage Bankers Association
. The group expects that number to drop "to $760 billion in 2013 and $360 billion in 2014 as rates increase and fewer borrowers find it beneficial to refinance," according to the Oct. 24 statement.
Written by Dan Freed in New York