On May 13, Federal Housing Finance Agency (FHFA) Director, Mel Watt, gave his first major address since assuming the position in January. The address, “Managing the Present: The 2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac,” was given at the Brookings Institution in Washington, DC.
Mr. Watt opened his remarks by saying “I do understand a number of you have been waiting for me and have expected to say some things sooner than now.”
Mr. Watt said that he does not intend for FHFA to engage in the housing finance reform debate currently under consideration in Congress. Specifically, Mr. Watt said, “another way of stating the principle that will be guiding us is that FHFA is focused on how we manage the present – the present conservatorships of the Enterprises and the present housing finance market under the present statutory mandates. As a result, one topic that is not on FHFA’s agenda, because it’s not part of our statutory mandate, is housing finance reform legislation.”
Another topic that Mr. Watt did not address was whether FHFA will lift the “temporary” suspension put in place in 2008 on Fannie Mae and Freddie Mac contributions to the National Housing Trust Fund (NHTF). The FHFA Director has the authority to lift the suspension. Mr. Watt’s predecessor as Director, Edward DeMarco, failed to revisit the suspension on contributions. NLIHC and many other advocates are hopeful that Mr. Watt will take a different position on the matter because Fannie Mae and Freddie Mac have been profitable for the last nine quarters.
In response to an audience question about whether FHFA would allow for principal reductions for underwater homeowners that have loans held by Fannie and Freddie, Mr. Watt said that the number of issues that FHFA has to deal with are like “water coming out of a fire hose.” Mr. Watt said he was not ready to weigh in with an opinion on the matter yet and added, “This doesn’t mean we’re not considering it, but we’re not ready to talk about it…There are a lot of other issues that fall into this category” – presumably including a decision whether NHTF contributions should commence.
Mr. Watt used the address to announce the release FHFA’s 2014 “Conservatorship Scorecard” and the “2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac.” The Strategic Plan is based on three goals:
- Maintain, in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets.
- Reduce taxpayer risk by increasing the role of private capital in the mortgage market.
- Build a new single-family securitization infrastructure for use by the Fannie and Freddie that is adaptable for future use by other participants in the secondary market.
Read the text of Mr. Watt’s prepared remarks at: http://bit.ly/1mBL9aF
Watch Mr. Watt’s address at: http://bit.ly/1gADHqO
Read the “2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac” at: http://1.usa.gov/1gjeZ3G
Read the conservatorship scorecard at: http://1.usa.gov/1gxcXNq