DS News

DS News January 2021

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

Issue link: http://digital.dsnews.com/i/1322815

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Page 85 of 99

84 84 INVESTMENT GOVERNMENT PROPERTY PRESERVATION INDUSTRY UPDATES Journal BIDEN PICKS MARCIA FUDGE TO LEAD HUD President-elect Joe Biden reportedly has selected Ohio congresswoman Marcia Fudge to lead the department. If confirmed, she would be the first Black woman in decades to serve as Secretary. Politico first reported the anticipated appointment based on information from two unnamed sources with "knowledge of the decision." Fudge, who has served in the House since 2008, today serves on the Committee on House Administration, House Committee on Agriculture, and House Committee on Edu- cation and Labor. She also chairs several other subcommittees, according to her website. Fudge represents many predominately Black areas of Cleveland as well as part of Akron, according to an article in Bloomberg. "If nominated, she would be one of just a few House members to leave for the Biden administration as Democrats fight to hold on to the small majority they've secured in the next Congress," Bloomberg reported. e Hill reported that House Majority Whip James Clyburn predicted Presi- dent-elect Joe Biden would nominate Fudge to a Cabinet position in a appearance on MSNBC's "Morning Joe." "Look for her to be in the Cabinet," Cly- burn said. "It may not be at Agriculture, but she will be nominated to be in the Cabinet." According to Politico, the offer to lead HUD follows weeks in which Fudge launched a bid to become Agriculture Secretary. While Politico reported that Fudge was emerging as a frontrunner, they noted that whoever takes the place of outgoing HUD Secretary Benjamin Carson will enter the department during a major "housing crisis." "Fair housing will also be a priority," Politico reported, adding that she will enter at a time when "the gap in homeownership rates between white and Black Americans has never been wider, a key driver of the persistent racial wealth gap." HIGH COURT TAKES ON FHFA 'SEPARATION OF POWERS' CASE e U.S. Supreme Court has taken up the case of Collins v. Mnuchin, which will determine whether the leadership structure of the Federal Housing Finance Agency (FHFA) violates the federal separation of powers and whether the courts will be able to void agency actions taken by the FHFA if it is determined that it acted unconstitutionally. e case is based on a lawsuit brought by shareholders of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which were placed into federal conserva- torship in September 2008 after losing rough- ly $108 billion in the run-up to the Great Recession. e FHFA was created in 2008 to serve as the regulator for the GSEs. Under the terms of the conservator- ship, the Treasury Department provided the GSEs with up to $100 billion in funding in exchange for a compensation agreement that encompassed the GSEs' stock, all dividends tied to the amount of money invested in the GSEs prior to the conservatorship period, and a priority over individual and institutional shareholders trying to recover their pre-con- servatorship investments in Fannie Mae and Freddie Mac. In August 2012, the FHFA and Treasury updated the agreement with Fannie Mae and Freddie Mac paying quarterly dividends tied to their net worth instead of the size of the Treasury Department's 2008 investment. In pursuing their lawsuit, the plaintiffs originally argued the FHFA and the Trea- sury Department did not have the authority to transact the 2012 update on the initial agreement, adding that the FHFA should not have been allowed to negotiate the agreement because its leadership structure of a single director who can only be fired by the president "for cause" was unconstitutional. e case before the Supreme Court does not focus on the 2012 amendment—a ruling by the U.S. Court of Appeals for the 5th Circuit stated that the issue needed to be ad- dressed legislatively through an update to the Housing and Economic Recovery Act of 2008 that created the FHFA. Instead, the Supreme Court will decide whether the FHFA's struc- ture is unconstitutional because the president is limited in the ability to remove its director, who is appointed for a five-year term. e Supreme Court heard oral arguments in the case today prior to adjourning for the remainder of the month. e court will resume its work after the New Year's Day holiday, and the case is expected to be ruled upon by late spring.

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