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Tuesday, May 13, 2014 1:46:26 PM
By Charles Wisniowski, Paul Muolo
cwisniowski@imfpubs.com, pmuolo@imfpubs.com
Federal Housing Finance Agency Director Mel Watt laid down his marker on the mortgage industry Tuesday morning, declaring at the Brookings Institution that it’s not the agency’s role to “contract the footprint” of Fannie Mae and Freddie Mac.
Moreover, it’s clear that the new FHFA director wants to loosen credit to consumers, a huge victory for trade groups such as the Mortgage Bankers Association and National Association of Realtors, which have been clamoring for such a move.
To some listening to his speech – his second to the industry – it marks somewhat of a reversal from his predecessor Edward DeMarco and likely will anger GOP officials who would like nothing more than to see Fannie and Freddie disappear.
In a question-and-answer session with reporters following his speech, Watt stressed that the agency’s role is to “maintain an efficient credit market.” The regulator believes that as “private capital demonstrates that it will come into the market, I think it will be clear that Fannie and Freddie will step back.”
Meanwhile, in his comments to reporters, Watt did not rule out Fannie and Freddie engaging in principal reductions on troubled GSE loans. For additional coverage, see related stories on IMFnews and the upcoming edition of Inside Mortgage Finance.
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