This week the Biden administration announced several high-level nominations, including Alanna McCargo to lead Ginnie Mae. But missing from those announcements was the White House’s widely expected pick for the next permanent director of the Federal Housing Finance Agency(FHFA), Mike Calhoun.
Sources told HousingWire at the end of last week that Calhoun’s nomination was likely to be announced on Monday, and some media sources preemptively published that information. However, the White House did not release an FHFA announcement in concert with McCargo’s nomination. This latest intrigue is just the latest in a turbulent few years for the agency’s leadership.
Calhoun is president of the Center for Responsible Lending (CRL), and if confirmed by the Senate will take over the post from Sandra Thompson, who was appointed acting director by President Joe Biden in June. Calhoun has spent 25 years at CRL, a nonpartisan, nonprofit research and policy institute focusing on consumer lending issues. First serving as general counsel for 10 years, Calhoun has been president of CRL for the last 15 years.
CRL is an affiliate of Self Help, a community development lender in Durham, North Carolina, where Calhoun served as general counsel from 1996 to 2006. Before that he was a partner at Gulley and Calhoun in North Carolina.
The role of the FHFA director has been at the center of controversy since the Supreme Court ruled in 2020 that the structure of another federal regulator, the Consumer Financial Protection Bureau (CFPB), was unconstitutional. That ruling gave then-President Donald Trump the ability to fire the CFPB director at will — and set a precedent for the same action against the FHFA director once Biden was elected.
When the Supreme Court ruled similarly regarding the FHFA in June, president Biden fired FHFA Director Mark Calabria and appointed Thompson as the acting director. Thompson has moved quickly on Biden’s agenda, especially on affordable housing initiatives.
What could the FHFA look like under Calhoun? In his role at CRL, Calhoun has frequently been called to provide testimony before House and Senate committees and subcommittees on various aspects of banking, lending, financial reform, consumer credit and consumer protection. (Hear him as a guest on a HousingWire webinar on fair lending here.)
In 2019, speaking before the Senate Committee on Banking, Housing and Urban Affairs, Calhoun gave a lengthy statement that included his thoughts on regulating and reforming Fannie Mae and Freddie Mac. In particular, Calhoun offered support for treating the GSEs like a public utility:
“The GSEs perform essential public services, and their charters and government backing are needed to make the 30-year fixed rate mortgage widely available to qualified borrowers. However, it is important that the GSEs do not use these tools to inappropriately expand beyond this secondary market function and interfere or unfairly compete with the private sector, especially in the primary mortgage market. Such expansion, though, can be lucrative for the GSEs. Utility-type regulation ensures both that the GSEs fully meet their public mission and that they do not use their status inappropriately.”
In that same 2019 hearing, Calhoun also described the FHFA’s regulatory role. “A primary reform of HERA was to create FHFA as a robust regulator of the GSEs. It has wide-ranging powers under its ongoing authority and truly extraordinary authority in its conservatorship role,” he said.
Calhoun’s background would seem to fit well with the Biden administration’s focus on racial equity and affordable housing. Reacting to the recent news that the FHFA was going to allow Fannie Mae to consider positive rental history in its underwriting process, Calhoun said it “removes a significant barrier, responsibly expanding access to mortgage credit and the economic opportunities that accompany sustainable homeownership.”
The FHFA was created in the wake of the financial crisis to oversee Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. In 2009, Ed Demarco was appointed Acting Director of the FHFA and served until 2013, when Mel Watt became the first FHFA director.
Watt served out his five-year term and was briefly succeeded by Joseph Otting, the Comptroller of the Currency. Otting was designated the Acting Director under President Donald Trump while Calabria waited for Senate confirmation.
In an analyst note on Tuesday, Keefe Bruyette & Woods housing analyst Bose George said the potential nomination of Calhoun is likely to be seen as “neutral to modestly positive for the housing market.”
“While Sandra Thompson, the acting director, has also been very focused on affordable housing, Michael Calhoun comes in with a clearly articulated agenda on ways that FHFA can increase the GSEs role in affordable housing,” George said. He added that housing-related companies, especially mortgage insurers, would view the news positively.
“The nomination of Calhoun could also be seen as a positive for Fannie Mae and Freddie Mac shares,” George wrote. “While GSE reform is unlikely to be a priority… it appears possible that Calhoun could support GSE privatization if it created utilities that could play a far more meaningful role in supporting affordable housing.”
