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themreport.com Right Decisions Making smart moves to accelerate business means knowing what's buzzing in the technology realm. Obama Nominates Replacement for DeMarco After months of speculation, President Obama named another potential candidate to take Edward DeMarco's place as head of the Federal Housing Finance Agency (FHFA), the conservator for the GSEs. Obama announced in early May his nomination of Rep. Mel Watt (D-North Carolina) to serve as FHFA's director, a role played by DeMarco since he was appointed acting director in August 2009. In his time as a congressman, Watt has made it part of his mission to put a spotlight on predatory lending practices and to ensure access to mortgages for low-income borrowers and those with flawed credit histories. "He's helped protect consumers from the kind of reckless risk-taking that led to the financial crisis in the first place. And he's fought to give more Americans in low-income neighborhoods access to affordable housing," Obama said in his personnel announcement. "So Mel understands as well as anybody what caused the housing crisis. He knows what it's going to take to help responsible homeowners fully recover." What the president sees as an asset, however, critics point to as a major weakness, especially at a time when the economy is trying to recover from an era of poor lending. "I could not be more disappointed in this nomination. This gives new meaning to the adage that the fox is guarding the hen house," said Sen. Bob Corker (R-Tennessee). "The debate around his nomination will illuminate for all Americans 8 | The M Report why Fannie and Freddie failed so miserably." As the current acting director, DeMarco has been the subject of (sometimes furious) debate, largely due to his staunch opposition to principal reduction on mortgage loans. While DeMarco and his supporters reason that debt forgiveness may encourage consumers to avoid paying debts in order to get assistance, his opponents maintain that his position stands in contrast with the administration's goals of foreclosure prevention and asset preservation. Homeownership Rate Declines to Lowest Level Since 1995 The number of households owning homes fell 698,000 to 74,511,000 in the first quarter, the first decline in almost two years, according to a Census Bureau report. At the same time, the nation's homeownership rate fell to 65 percent (seasonally adjusted), the lowest level since the fourth quarter of 1995. The homeownership rate peaked at 69.2 percent in the second quarter of 2004. The rate measures the proportion of households owning their primary residence, computed by dividing the number of households that are occupied by owners by the total number of occupied homes. A year ago and in the previous quarter, the homeownership rate stood at 65.4 percent. The Census data paints a grim picture for the home sales market, which has already been struggling against mortgage restrictions and weak inventory. The Census report suggests homeownership may have lost its place in the "American dream" as a new generation of potential homebuyers may have become wary of homeownership as a result of the wave of foreclosures in the last several years. The homeownership rate for older Americans—65 and over—dipped in the first quarter to 80.4 percent, the lowest level since the second quarter of 2010, when it was also 80.4 percent. The rate was 80.7 percent in the fourth quarter. Meanwhile, the homeownership rate for those under 35 fell to 36.8 percent in the first quarter from 37.1 percent in the fourth quarter. Regionally, the homeownership rate rose only in the Midwest, up to 70 percent from 69.7 percent in the fourth quarter. The homeownership rate fell to 62.5 percent in the Northeast from 63.9 percent in the previous quarter—affected in part by Superstorm Sandy. In the South, the rate fell to 66.5 percent from 67 percent and fell to 59.4 percent from 59.5 percent in the West. Are Housing Headwinds Actually a Blessing? provided enough lift to offset the headwinds holding the recovery down—and that's a good thing, says David Hicks, co-president of Dallas-based HomeVestors. While reluctance from lenders, sellers, and appraisers has become something of a drag on sales and price improvements, Hicks asserts the market's slow growth has kept the country away from another housing bubble. "At the price point of the market we generally service, typically at or below the median price, securing a fair appraisal and financing are typically the major challenges our franchisees face when selling a property," Hicks said. "Since we focus on 'ugly houses' that owners are anxious to sell, we're not as affected by seller reluctance as is the general market. Everything our franchisees have for sale is selling quickly, and in fact, the first quarter of the year was one of the best ever." However, Hicks noted that HomeVestor franchisees have reported an increase in buyer reluctance for the homes that are being put on the market. Would-be buyers seem especially reluctant in areas where prices have increased significantly, Hick says—largely because they're not certain on the stability of the market and want to avoid overpaying. "Prices have not yet risen at the pace of demand," Hicks observed. "We would have expected prices to rise higher than they actually have." Gains in home prices over the last year haven't Are you an origination news junkie? Go to TheMReport.com and sign up to receive MReport news daily! 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