The new Director of the Federal Housing Finance Agency Mel Watt, is reversing the previous Director Edward DeMarco’s position that the Freddie and Fannie should be tightened to reduce their roles in the housing market. They were trying to push private money into taking over the financing role… but it wasn’t working.
Speaking at The Brookings Institution Forum on the Future of Fannie Mae and Freddie Mac, Watt addressed FHFA’s twin obligations of preserving Fannie’s and Freddie’s assets while working to “ensure a liquid and efficient national housing market.”
Central to this strategy will be Fannie’s and Freddie’s actions to increase liquidity in the present single-family housing market, improve servicing standards and foreclosure prevention actions, and foster greater activity in the area of affordable multifamily properties. Watt said that would involve relaxing previous mortgage standards and payment history requirements.
The FHFA also seeks to build a new single-family securitization infrastructure for use not only by Fannie and Freddie but also by other participants in the secondary markets. This would involve a common securitization platform and moving Fannie and Freddie to a single common security as a means to improve liquidity and increase efficiencies by leveraging the current systems and resources.
All this easing is now the result of the government adjusting because the housing market is slowing down. The slow down and tightening of lender credit was partly caused by the new Dodd Frank regulations applicable to mortgages being implemented this year, and the lenders unsure how to implement the rules. It’s been a tightrope making loans that meet the guidelines perfectly and avoiding government heat… and making enough loans to stay in business.
Specialist in the Art of Real Estate Sales and Finance
Ron Henderson GRI, RECS, CIAS
Multi Real Estate Services, Inc
Gov’t Affairs Chair – California Association of Mortgage Professionals