New FHFA Chief to Loosen Credit Standards?
January 7, 2014
Mel Watt was sworn in Monday as the head of the Federal Housing Finance Agency, and many in the mortgage industry believe that Watts’ confirmation signals a new shift in U.S. housing policy with greater access to credit, Reuters reports.
"Today's housing finance system is one of the keys to our economic recovery," Watt says. “[I hope] to develop a strong foundation for moving this system forward for the benefit of all Americans at this critical point in our nation's history."
As the new FHFA head, Watt will oversee mortgage giants Fannie Mae and Freddie Mac, which back about 60 percent of U.S. home loans. Watt has already announced that he plans to delay several Fannie Mae and Freddie Mac fee hikes. In December, FHFA Acting Director Edward J. DeMarco announced Fannie Mae and Freddie Mac would charge more to lenders who guarantee loans for borrowers with mid-range or lower credit scores, as well as those who didn’t meet certain down payment guidelines. Watt says he wants to delay those fee hikes until he has more time to review the reasoning behind them.
Those in the mortgage industry also are hopeful that Watt will expand federal programs that allow underwater borrowers with loans backed by Fannie Mae and Freddie Mac to lower their interest rates.
Also on Monday, the Senate confirmed President Obama’s nominee Janet Yellen as the next Federal Reserve chairman in a vote of 56-26.
Source: “New Finance Agency Chief Mel Watt Might Loosen Credit,” Reuters (Jan. 6, 2014)
Updated: June 18, 2018