Mel Watt’s plan to loosen mortgage credit will shape housing finance for years

Joseph Lawler
The Washington Examiner
5/17/2014

Despite being a new officeholder of a relatively obscure federal agency, Mel Watt drew a strong reaction for his speech Tuesday by signaling that the federal government will increase its role in helping more Americans buy houses.

For now, credit standards for home loans remain tight. But Watt’s speech also sketched out a greater long-term role for the bailed-out mortgage businesses Fannie Mae and Freddie Mac…

…Watt began his speech noting “certain changes in focus” from the plans laid out by his fiscally conservative predecessor Ed DeMarco, and then outlined a number of plans to loosen the terms that Fannie and Freddie require for the loans they insure. The two government-sponsored enterprises buy loans from lenders and package them into insured securities, with the purpose of increasing liquidity in the mortgage markets.

The immediate reaction to Watt’s speech was to raise concerns that his actions would inflate a new housing bubble, and it drew strong condemnations from right-of-center analysts…

…Watt’s decisions will not just shape the short-term availability of mortgage credit. They also will play a critical role in shaping the housing finance system for years…

 

 

The entire article, with graphics, is at The Washington Examiner.

 

 

 

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