WASHINGTON - Stephanie Smith, named by HUD to monitor the affordable-housing performance of Fannie Mae and Freddie Mac, is a housing activist who is unlikely to be content with a passive role.

Washington observers said Ms. Smith, a program officer at the Local Initiatives Support Corp., would probably push Fannie Mae and Freddie Mac to do more in affordable-housing market and has the front-line experience to show them how.

The New York-based nonprofit company works with state housing finance agencies, local governments, commercial lenders and other nonprofits to hammer together financing for affordable housing. It also has a small secondary market company that pools such loans.

Social Investment Banker

As program officer for the last four-and-a-half years, Ms. Smith said she has worked as a "social investment banker." She said she had raised money, evaluated projects, provided technical assistance, and worked with groups to put together such deals. Earlier, she worked with an investment affiliate, National Equity Funds.

In an interview with the American Banker, Ms. Smith said she saw her role at the Department of Housing and Urban Development as bringing together people "who have the same role, but may not see [they] have the same role."

"My understanding is that the secretary wants this to be a partnership with Fannie and Freddie [to] work for new ways to bring capital to the field," she said. "It's not regulation for regulation's sake. It's to bring new products into the field and make the industry more productive."

Congress overhauled federal regulation of government-sponsored Fannie Mae and Freddie Mac last year. It set up an independent regulator to monitor the safety and soundness of the two companies. It also told both to increase their business in low-income and central-city areas, and set specific targets for them.

Last week, HUD issued tough regulations to implement those targets, and observers expect the agency to set higher targets in 1995.

Ms. Smith said she would coordinate the writing of the 1995 regulations. She starts work Nov. 1. The agency has not announced her appointment yet.

Though officially a special assistant to HUD Secretary Henry Cisneros, she will work closely with the assistant secretary of housing, Nicholas Retsinas.

Mr. Retsinas is believed to be taking the lead on expanding the roles of Fannie Mae and Freddie Mac in affordable housing. Sources agreed that the tough political decisions on pushing the powerful companies to do more would come from Mr. Retsinas, rather than Ms. Smith.

Multifamily Housing

One such area may well be Freddie Mac's performances in the multifamily market. HUD went out of its way to criticize Freddie's absence from the market since it took losses there in 1990. It warned Freddie that it would fail to meet its affordable housing goals this year and next if it did not full enter that market.

Ms. Smith declined to make direct comment on HUD's statements.

But she said, "I think the commitment differs [at the two companies]. I think [both companies] have put in place mechanisms" to achieve the housing goals.

"Some of them may need to be speeded up," she added.

"I think she knows what works on the street," said Chris Lewis, director of banking and housing policy at the Consumer Federation of America.

"She's coming from the front line," Mr. Lewis added, and can point Fannie Mae and Freddie Mac "in the direction of what works and what doesn't."

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