Although several news reports have put the odds of Rep. MelWatt's confirmation as the director of the Federal Housing FinanceAgency at 50% or less, the North Carolina congressman's senatehearing could reveal more details about the Obama Administration'splans for housing finance reform.

CUNA Senior Vice President of Legislative Affairs Ryan Donovansaid he thinks Watt will get a hearing, and the process could “havesome impact in the short term on housing financereform.”

The North Carolina Democrat has previously supported so-calledmortgage cramdown legislation that would force lenders to acceptmortgage principal reductions in bankruptcy proceedings: he was anoriginal co-sponsor of a mortgage cramdown bill in 2007 and votedin favor of Rep. John Conyers, Jr.'s (D–Mich.) cramdown bill thatpassed the house in 2009 but was killed in the Senate.

Current FHFA Acting Director Edward DeMarco has resistedpressure from the Obama Administration and some state attorneysgeneral to include principal forgiveness in modification programsat Fannie Mae and Freddie Mac.

Watt, nominated by Obama earlier this week, was also one of 19congressmen and women who urged the president during fiscal cliffnegotiations in December to include principal forgiveness in anydeal.

“Given the clear benefits of providing assistance to underwaterborrowers, as well as the significant savings for the Americantaxpayers, we believe that provisions expanding such assistanceshould be part of any deal to resolve the fiscal cliff. At aminimum, such legislation should require that Fannie Mae andFreddie Mac offer principal reduction loan modifications toborrowers who are net present value positive,” the letterstated.

However, Donovan said opposition to Watt's confirmation isn'tabout him personally, but instead about differences between Obamaand Senate Republicans when it comes to housing finance reform.

“To an extent, he runs into the same issues that any nomineewould,” the CUNA lobbyist said. “Party division on this issue ispretty significant.”

Donovan refused to speculate on Watt's odds of confirmation,saying Democrats and Republicans could potentially cut a deal thatcould pave the way. However, he added that he hasn't seenevidence of willingness between the two parties to compromise onthe issue.

Industry lobbyist John McKechnie, partner at theWashington-based firm Total Spectrum, said housing finance reformhas so many moving parts, it's difficult to see a moving pathforward.

“Against that backdrop, I don't think Congressman Watt'snomination changes much, because I don't think it's likely for himto be confirmed,” he said.

Despite the principal forgiveness issue and the fact that Watt'sdistrict includes Bank of America's headquarters in Charlotte, CUNAand NAFCU say they have a good relationship with thecongressman.

“Congressman Watt has spoken before NAFCU's CongressionalCaucus, has always been accessible and open to credit unions andNAFCU,” said Executive Vice President Dan Berger, who will takeover as the trade's CEO in July. “He is a respected member ofCongress, and we appreciate his willingness to meet regularly withNAFCU-member credit unions and to hear their concerns.”

Donovan said Watt thoughtfully studies issues brought to his attention.

“As a congressional staffer, I saw him many times in markupsactually reading the bills and having them next to the code book,so as he looked at the bills he also looked at US Code to seebroader impact of changes,” the CUNA vice president said. “When we've spoken with him, he has always had very good, strongand relevant questions and they've never been gotcha questions,they've been because he wants to understand the issue. And I thinkhe'd take that perspective on any matter of public policy.”