Ed DeMarco, current acting director of the Federal Housing Finance Agency, was surprisingly greeted by members of the Senate Banking Committee with warm remarks.

They even applauded DeMarco for his work since he is overseeing Fannie Mae and Freddie Mac, two very complex systems.

However, it wouldn’t be a showdown in the committee room unless a few sparks flew.

One of the biggest decisions DeMarco announced in the FHFA’s 2013 scorecard was the 10% cutback in multifamily business volume.

Sen. Mark Warner, D-Ind., particularly blasted the current acting director’s decision to cut down Fannie Mae and Freddie Mac’s role in the commercial mortgage-backed securities realm.

Warner claims multifamily was the not the problem that originated the housing collapse so why bother to cut funds?

DeMarco agreed with the senator, but pointed out he has no worries about a liquidity crisis happening in the multifamily market given investors are quite competitive in CMBS and the market holds a great deal of private capital.

To be clear, the acting director is calling for a 10% cut, suggesting he firmly believes the government plays a vital role in housing market.

Nonetheless, DeMarco repeated throughout his grilling – or lack there of – that the entire process is gradual and expects the shrinkage of the government-sponsored enterprises’ footprint to happen over the next five years – key word being 'shrinkage' not 'nonexistent.' 

However, many market experts are feeling Warner’s pain and believe the decision to cutback in the multifamily market is a bold choice. 

Willy Walker, chairman and CEO of Walker & Dunlop, has stated to HousingWire his qualms about shrinking multifamily, even going as far to say that this decision does not live up to the FHFA’s mission.

"So you have an activist regulator well outside of his mandate (actually acting AGAINST the purpose and goals of conservatorship) while Congress runs in circles on what type of long-term, well-defined, and executable plan they want enacted for the GSEs and more broadly housing reform," Walker said.

Regardless if you agree with DeMarco’s decision of the 10% cutback, this shouldn’t be earth-shattering to the market, considering he has been calling for the tapering of Fannie Mae and Freddie Mac’s dominance for quite some time.

The bigger question that should be asked is this:  When the enterprises’ conservatorship is finally up, will there be a final destination in place by Congress as to their role in the mortgage finance system or will we be still sitting in limbo?

I certainly hope for the market’s sake that Congress comes to a conclusion sooner rather than later.