Federal Housing Finance Agency Director Met Watt and U.S. Secretary of Housing and Urban Development Julian Castro announced their plans to address some of the housing finance industry pain points in what MBA CEO David Stevens called "extremely positive" policy steps.
Speaking at the Mortgage Bankers Association Annual Convention & Expo on Monday, Watt and Castro outlined changes that would reduce confusion and risks for lenders.
"We know that access to credit remains tight for many borrowers, and we are also working to address this issue in a responsible and thoughtful manner," Watt said. "Additionally, FHFA continues to evaluate ways to refine and improve the loss mitigation and foreclosure prevention policies at the Enterprises, because we understand that many individuals and families are still facing the possibility of foreclosure and are looking for alternatives to stay in their homes."
Watt said that the FHFA was clarifying the Representations and Warranty Framework to help reduce repurchases.
Watt said the GSEs would be announcing more details on changes related to reps and warranties in the near future, including:
- Developing an independent dispute resolution process
- Identifying cure mechanisms and alternative remedies for lower-severity loan defects
- Servicing representations and warranties
- Modifying compensatory fees and foreclosure timelines.
Watt said the The FHFA and GSEs are in the process of creating the Common Securitization Platform, which will create a shared securitization infrastructure for Fannie Mae and Freddie Mac that will operate under the Common Securitization Solutions corporate structure. The FHFA will be naming a CEO to the CSS by the end of the year, Watt said.
"Credit is the lifeblood of the housing industry," Castro said. "It’s in our entire nation’s interest to help more responsible Americans succeed in the housing market by expanding access to credit."
Castro outlined HUD's plan to expand access to credit with its Blueprint for Access initiatives:
- Overhauling the Single Family Housing Policy Handbook to give lenders clarity on policies and compliance
- Launching the Supplemental Performance Metric to capture a more in-depth view of a lender's portfolio performance, comparing lenders on their performance with others doing business in specific credit score ranges
- Redrafting the Loan Defect Taxonomy to streamline 99 different codes into nine categories of loan defects
- Initiating a Ginnie Mae pilot program to give smaller lenders more access to the secondary market
The policy changes from Watt and Castro were anticipated from comments made last week, as HousingWire covered in a report from the Wall Street Journal. Stevens and other leaders also referenced the changes in their speeches this morning, challenging the regulators to ease the incredibly strict underwriting standards now required to originate a mortgage loan.
Following the announcement, Compass Point analysts said in a note to clients, "We view this development with cautious optimism as it reinforces our belief that policymakers are willing to embrace initiatives aimed at increasing the flow of mortgage credit." Compass Point listed the biggest winners of this kind of credit box expansion as originators, private mortgage insurers and home builders.