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Tuesday, May 13, 2014

A Few links on FHFA Watt's Speech

by Calculated Risk on 5/13/2014 06:56:00 PM

• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, the Producer Price Index for April from the BLS. The consensus is for a 0.2% increase in prices.

From FHFA Director Melvin Watt: Managing the Present: The 2014 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac

From Nick Timiraos at the WSJ: Fannie, Freddie Regulator Signals Broad Shift in Housing Policy

Also from Nick Timiraos at the WSJ: Six Takeaways From Mel Watt’s Speech on Housing



NEIGHBORHOOD STABILIZATION PILOT PROGRAM: The FHFA will launch a pilot project in Detroit ...

OFFLOADING MORTGAGE-CREDIT RISK: Rather than focus on contracting the footprint of Fannie and Freddie ... Mr. Watt said the companies would now focus on reducing taxpayer risk without necessarily shrinking the companies’ size. ..

From David Stevens at the Mortgage Bankers Association: MBA Statement on FHFA Director Watt’s Comments
In his first major speech outlining his priorities as the conservator for, and regulator of, Fannie Mae and Freddie Mac, Director Watt is showing that he has hit the ground running and put a lot of thought into the path he intends to take with the two companies. ...

“Given the difficulties passing GSE reform legislation as the mid-term elections approach, it is good to see Director Watt looking hard at the tools he has at his disposal to help reform and improve the housing finance system. To be sure, this does not in any way lessen the need for Congress to enact needed reforms, but the Director’s comments today indicate that positive change could be on its way in the meantime.”
From Jim Parrott at the Urban Institute: A strong pivot from the new director of FHFA
With this speech, Director Watt has formally ushered in a new era for the FHFA and GSEs. He has pivoted, rather emphatically, from the prior regime’s focus on preparing the enterprises for wind-down to better positioning them to serve as the central conduit for mortgage financing for the indefinite future. At a time when access to credit remains a serious challenge and the timing and shape of long term reform from Congress is deeply unclear, the pivot is a useful one. Even if one believes, as do I, that we need to chart a course for long-term reform, and that that course should involve the winding down of these two enterprises, that is arguably not the job of their conservator. The job of the FHFA is first and foremost to increase the stability and efficiency of the system as it stands. Director Watt has recognized this challenge and risen to it admirably.