WASHINGTON, DC-Congress is full of goodies this week. First came news of a budget agreement that would replace some of the nastiest sequester cuts with other savings. Then, the Senate confirmed Rep. Mel Watt (D-NC) as director of the Federal Housing Finance Agency.

Watt was confirmed in a 57 to 41 vote, largely along partisan lines. Indeed, his nomination might not have made it across the finish line had it not been for the controversial and in some quarters much maligned move by the Senate in November to eliminate the use of the filibuster against the majority of presidential nomines.

Watt faces an ambitious agenda as director: he is charged with conserving the assets of Fannie Mae and Freddie Mac, regulating the GSEs and possibly to help prepare the GSEs to transition to a new, privatized housing finance system.

No one knows what decisions he will make or positions he will support, although whispers in Washington have it that he is most likely to follow the lead of the Administration, whereas his predecessor, Edward DeMarco, was more of a free thinker and took his role of conservator of assets very literally.

Even without a clear idea of Watt's policies, one thing is for certain -- his appointment brings some much-needed continuity to the sector.

"Right now, the biggest risk to the GSE multifamily footprint is uncertainty," says one player in the industry that did not wish to be identified. "We just don't know what the future will hold and that makes it difficult to plan. With a permanent director on board, hopefully some more certainty can come into the mix and people will feel more confident." Having a permanent director will also improve morale at the GSEs, which according to industry scuttlebutt, has been low. Workers at these agencies feel they have been unduly punished for the financial crash.

In the near term the most important decision coming out of the FHFA is the release of the 2014 Conservatorship Scorecard for Fannie Mae and Freddie Mac. A spokeswoman for that agency tells GlobeSt.com that work on it is well underway , although she declined to say when the Scorecard would be made public. What is clear, though, is that the Scorecard will have a strong impact on the GSEs and the industry. Last year it directed the GSEs to cut back by 10% their multifamily originations.

Whether Watt will weigh in on the Scorecard is a key question, and there is no shortage to the guessing in the industry. This could play out in a number of ways, Willy Walker, CEO of Walker & Dunlop tells GlobeSt.com.

"There is a lot of speculation about that," he says. "There is talk that DeMarco might try to push the Scorecard out ASAP because he wants to leave his mark on the FHFA and the agencies as his send off. The flipside argument is that he won't do that because it would be subject to the sign off of the new director anyway."

One factor to consider is the criticism heaped on the FHFA last year when it put out its 2013 Scorecard in March, Walker added. Namely, people pointedly noted that that it is impossible to plan for a year when direction comes out in March. But even if 2014's Scorecard is delayed for a bit it might not be as much of a problem as Walker has a theory that the next guidance will be for the longer term anyway.

"Some of the feedback the FHFA got was that one-year short term change is difficult," he said. "On the multifamily side, at least, I think they will set up three-year objectives that will allow the GSEs many ways of meeting them. They may give them targets that are further out or allow them to focus on the origination side or how much risk they are retaining," Walker says. "That is what I believe the regulator is focusing on and not a 10% cut."

Whatever the objectives may be, it is a certainty they will be closely followed by the entire industry and their impact will be widespread. "Multifamily is dominated by Fannie and Freddie," says Clay Sublett, Senior Vice President at KeyBank Real Estate Capital. There are other sources in the private sector, of course, such as CMBS and life and banking lending, but they cannot hold their own against the GSEs, he notes. "It is not a level playing field," Sublet tells GlobeSt.com. "When Fannie and Freddie decide to step on the gas they can clearly dominate the market."

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What Watt Brings to the Multifamily Table

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