Don't Wait for Watt, Dump DeMarco Now: N.Y. AG Schneiderman

New York Attorney General Eric Schneiderman just can't wait for Edward DeMarco's reign at the Federal Housing Finance Agency to end.

While applauding President Obama's pick of Rep. Mel Watt, D-N.C., to permanently head FHFA, Schneiderman reiterated Wednesday he wants the administration to immediately replace DeMarco, the acting director, with someone who would act now to forgive part of the principal on loans for homeowners facing foreclosure.

DeMarco, a career civil servant whom the president appointed in August 2009, has perturbed people inside and outside the Obama administration over his refusal to accede to the loan modification proposal.

"This nomination is a good first step, but struggling homeowners cannot afford to wait for the Senate to complete the confirmation process," Schneiderman said in a press release. "The president should use his legal authority to replace Edward DeMarco with a new acting director who will start the effort to put FHFA on the side of working families immediately."

The call continues a campaign by Schneiderman and other state attorneys general to dump DeMarco, who drew fire after rejecting as proposal last year by the administration to give Fannie Mae and Freddie Mac a financial incentive to relieve struggling borrowers of some debt. A 2008 law created the FHFA to regulate the mortgage giants, and it has been their conservator since the government took them over later that year.

In March, Schneiderman and Massachusetts Attorney General Martha Coakley led a group of nine state attorneys general who demanded a change in the FHFA's leadership. "By refusing to allow for principal write-downs that would result in more loan modifications, FHFA stands as a direct impediment to our economic recovery," the officials wrote to the president and Senate leaders.

A memo by two of Schneiderman's top deputies that was published recently concludes that federal law gives the White House the ability to remove DeMarco and replace him with one of three deputies.

Schneiderman co-chairs the Residential Mortgage-Backed Securities Working Group, which was formed by the Obama administration last year to probe wrongdoing in the mortgage market.