Lawmakers and those involved in the nation’s housing industry remain frustrated by a lack of communication and guidance from the office of Mel Watt, who became director of the Federal Housing Finance Agency in January, regarding his plans for Fannie Mae and Freddie Mac, Reuters reported April 14.
As FHFA director, Watt exercises influence over $5 trillion in mortgages owned or backed by the government-sponsored enterprises.
Insiders told Reuters that Watt is unlikely to make any dramatic changes to FHFA’s current course, and so far the only policy action he has taken is to set aside a decision by his predecessor Edward DeMarco to increase loan fees for the GSEs.
The FHFA also has failed to release its scorecard, which generally appears in the first quarter, and the agency has declined to comment on when that scorecard will come out. The scorecard would likely reveal whether or not Watt wants to reduce the GSEs’ footprint in the housing market and would indicate what fees the agency will charge and the size of loans the GSEs can guarantee.
If lawmakers fail to act on housing reform legislation, Watt could have a pretty big influence on industry strategy given that Fannie and Freddie remain at the center of the nation’s housing finance system, Reuters reported.
“Watt’s voice has been muted,” Brandon Barford, a partner at policy research firm Beacon Policy Advisors, told Reuters. “He hasn’t publicly been part of the debate.”
While DeMarco was clear about his intent to refuse principal write-downs on underwater mortgages, it’s uncertain what Watt’s position is or will be.
“He's being a little cautious, but that's probably good at this point,” James Lockhart, a former director at FHFA who now is vice chairman at turnaround consultant WL Ross & Co., told Reuters. “It's a big job to oversee two of the largest financial institutions in the world, and getting inside those behemoths is always an issue.”