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THE FEDERAL HOUSING FINANCE
Agency (FHFA) supervises
corporations responsible for the
mortgages on millions of American
homes. In 2011, the FHFA came
into conflict with the Obama
administration over a plan to help
homeowners who were unable to
make their mortgage payments and
risked losing their homes to the bank.M
ILLIONS OF AMERICANS WORK IN THE FEDERAL bureaucracy. Most of the
time, their workdays involve routine actions that attract little attention from
elected offi cials or the general public. However, even professional bureaucrats
who were hired for their technical expertise—rather than their connections
to a politician or party—can fi nd themselves at the center of political confl ict.
Consider the case of Edward DeMarco, acting director of the Federal Housing
Finance Agency (FHFA) in 2011.^1
One of the primary roles of DeMarco’s agency is to supervise two federally
sponsored corporations, the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation (also known as Fannie Mae and
Freddie Mac), that own trillions of dollars of home mortgages. If you or your
parents own a home with a mortgage, your monthly payment may well go to one
of these agencies. After the sharp declines of housing prices in 2007–08, Fannie
Mae and Freddie Mac required federal bailouts totaling over $170 billion, and
their futures are now uncertain.
The confl ict DeMarco faced involved the Obama administration’s attempts
in 2010 and 2011 to help homeowners whose mortgages were “under water”—
meaning their homes were worth less than they owed on their mortgages.
Obama proposed new regulations that would encourage mortgage-holding
corporations to reduce the amount owed, thereby shrinking homeowners’
monthly payments and enabling them to continue paying their mortgages rather
than abandoning their homes to foreclosure.