Tags: fannie | freddie | mortgage | fee

Delay in Mortgage Fee Increase by Watt Signals Policy Change

By    |   Monday, 06 Jan 2014 08:46 AM

Rep. Mel Watt of North Carolina will be the new head of the Federal Housing Finance Agency that oversees Fannie Mae and Freddie Mac as of Monday, which is expected to signal the biggest change in housing policy since President Barack Obama took office. 

Watt had asked outgoing acting director Edward DeMarco to delay the loan fee increase that DeMarco had announce in early December that he was planning to implement, in an effort to reduce the footprints of Fannie and Freddie, but DeMarco turned down his request, The Wall Street Journal is reporting.

However, the incoming director announced in December, after his nomination was approved by the Senate, that he would delay the fee once he took office, after asking DeMarco to do so, according to sources.

Watt said that it was "important to announce my intentions" before he took office because lenders might have begun to implement the fee even though it wasn't scheduled to go up officially until March.

It was designed to hit borrowers who didn't have perfect credit scores and those that didn't have large down payments. The idea was to make Fannie and Freddie more competitive with private investors, but consumer and industry groups were not happy with it because they argued that it would just get passed on to borrowers by increasing mortgage rates, which was going to have the opposite effect the Obama Administration was going for of increasing private investment.

The delay in this fee increase is considered a course correction for the regulator.

The change signals that Watt will focus on making sure there is greater access to mortgage credit, which appears to be a greater priority for the incoming director than reducing the government's footprint in the housing industry, according to analysts.

"In this instance, a strategic pause is just as significant as a shift in policy," said Isaac Boltansky, who works as a policy analyst for Compass Point Research & Trading.

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Rep. Mel Watt of North Carolina will be the new head of the Federal Housing Finance Agency that oversees Fannie Mae and Freddie Mac as of Monday, which is expected to signal the biggest change in housing policy since President Barack Obama took office....
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2014-46-06
Monday, 06 Jan 2014 08:46 AM
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