WASHINGTON Feb 19 The new regulator of Fannie
Mae and Freddie Mac has made it a priority to meet with housing
and real estate trade groups, the latest signal that he is
taking their concerns about credit availability on board.
Fannie Mae and Freddie Mac dominate the nation's housing
finance system, and decisions made by their regulator, Federal
Housing Finance Agency Director Mel Watt, can have a big impact
on the capital flowing to borrowers.
"While we are lacking policy specifics as the FHFA has been
radio silent since Director Watt was sworn in, there is no doubt
that mortgage credit availability will be prioritized," said
Isaac Boltansky, a policy analyst at Compass Point Research &
Watt, in one of more than a handful of meetings with housing
industry groups since taking office on Jan. 6, sat down with the
head of the National Association of Realtors earlier this month
to discuss the mortgage market.
"Director Watt listened carefully to our concerns," NAR
President Steve Brown said in a blog the group posted about the
Feb. 12 meeting. The item included a photo of the two
arm-in-arm. "It's clear Director Watt understands the crucial
role of residential real estate to the economy."
Watt had already rallied to the real estate industry's side
even before he was sworn by stating that he would place a hold
on planned increases in fees Fannie Mae and Freddie
Mac charge to guarantee loans.
With that move, Watt provided an early indication that
maintaining borrowers' access to mortgage credit would be a
central consideration in his policy decisions.
Many consumer and housing industry groups said the fee
increases would have raised certain fees charged to borrowers
without perfect credit scores or large down payments. They also
said it would unlikely accomplish the FHFA's goal of attracting
more private investment in housing.
His predecessor, Edward DeMarco, was often attacked by
liberal groups and the political left of putting too heavy a
weight on protecting the taxpayers that bailed out the two
mortgage finance firms at the height of the credit crisis.
DeMarco had signed off on the planned loan fee hikes.
"Watt's career has always been political, even in private
practice prior to Congress - he consistently seeks to increase
economic and political opportunity for the disadvantaged," said
Brandon Barford, partner at Beacon Policy Advisors. "DeMarco is
an institutionalist, while Watt is an activist."
Fannie and Freddie currently back 60 percent of all new U.S.
home loans and are sweeping their profits from the housing
recovery to the U.S. Treasury. Taxpayers propped up Fannie and
Freddie to the tune of $187.5 billion in bailout funds since
they were seized by the government in 2008, but they have paid
$185.2 billion to the Treasury in dividends for that support.
Watt's decisions on a range of issues, from the insurance
premiums the firms charge and the size of the loans they
guarantee to whether or not he pushes Fannie and Freddie to
take more aggressive efforts to offer homeowners assistance,
will be watched closely.
"It's clear to observers in Washington that Watt is asking
hard questions on credit availability - because right now the
mortgage world is limited to pristine loans, which shuts out
young families and families of modest wealth," said Robert
Zimmer, Head of External Affairs with Community Mortgage Lenders
The FHFA and Watt declined to comment.
Watt is highly regarded by consumer advocates that see him
as an ally for troubled homeowners. He will likely come under
pressure to make loans less expensive and easier to get,
especially for first-time and minority borrowers.
So far, however, Watt has not provided any details about his
intentions on the long list of pending decisions on his plate.
But many expect the former Democratic congressman to align the
FHFA with the Obama administration's policy goals.
"Mel is very careful and thoughtful. I would not expect him
to move radically on any issues," said David Stevens, president
of the Mortgage Bankers Association. "I certainly would expect
him to have a frequency of meetings with all stake holders."