Fannie Mae has named Timothy Mayopoulos, its top lawyer and a former general counsel for Bank of America, its new chief executive, the New York Times reported. He replaces Michael Williams, who stepped down after 21 years at Fannie, including the last three as CEO.
Mayopoulos has already taken a stance on one of the most controversial issues facing the government-sponsored enterprise. He sided with Federal Housing Finance Agency director Edward DeMarco in saying he doesn’t think Fannie Mae should accept billions in losses by granting troubled homeowner principal reductions on their underwater loans. Though some have said it would actually save the agency money.
“We have the tools we need to assist homeowners with troubled mortgages,” Mayopoulos said. “I don’t believe we need principal forgiveness as a tool. We are already effective with the tools we have.”
Fannie has relied on widespread loan modifications to help homeowners by lowering their monthly payments.
Bloomberg News noted that another difficult issue facing the new CEO comes from his former employer, Bank of America. The bank has refused to repurchase billions of dollars of faulty home loans it sold to Fannie Mae. In January, Fannie responded by cutting the bank off for new loan funding.
Mayopoulos will take a pay cut in his first year on the job, according to Bloomberg, as widespread compensation reductions will slash his pay to $600,000 next year from $2.7 million this year. [NYT] and [Bloomberg News]