Famed Economist Mark Zandi Is A Front-Runner To Replace Edward DeMarco As FHFA Head: Report

By Douwe Miedema

WASHINGTON, April 13 (Reuters) - Mark Zandi, a well-known economist, is a front-runner to lead the U.S. housing regulator and oust Edward DeMarco, who critics say hasn't done enough to aid homeowners, the Wall Street Journal reported.

President Barack Obama tried to replace DeMarco in 2011 as head of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, but Senate Republicans blocked his nominee to succeed DeMarco.

The two agencies help finance two-thirds of new U.S. home loans, but were seized by the government in the 2008 economic crisis when mortgage losses mounted. They have since drawn nearly $190 billion from the U.S. Treasury to stay afloat.

Zandi is rating agency Moody's often-quoted chief economist, and has testified many times as a witness in congressional hearings. He has also published a well-received study about the 2008 mortgage market implosion.

The White House had not made up its mind about the nomination, but there were signs that Zandi might draw some Republican support, the Wall Street Journal said on Saturday, quoting people familiar with the matter.

The White House declined to comment. Zandi declined to say whether he had been approached for the job, or whether he was interested in the position.

The Journal said representative Mel Watt, a North Carolina Democrat, was also a candidate to replace DeMarco.

New York Attorney General Eric Schneiderman said this week that Obama has the power to send DeMarco home and can likely replace him without congressional approval, for instance with one of the agency's deputy directors.

An eight-page memorandum prepared by Schneiderman's team quoted Sandra Thompson, who was recently appointed as a deputy director, was a viable replacement.

Liberals take issue with DeMarco's decision to block Fannie Mae and Freddie Mac from reducing loan principals for borrowers who owe more than their homes are worth, a position at odds with that of the White House. (Reporting by Douwe Miedema and Roberta Rampton. Editing by Christopher Wilson)