In his first major public address, FHFA director Mel Watt said that the agency will not be directing Fannie Mae and Freddie Mac to lower limits for the mortgages they back, and the agency will focus more on affordability, loosening credit standards, and expanding access to credit, and less on what direction GSE reform takes.

Among other policy announcements, Watt said he was putting an end to the proposal by his acting predecessor to lower the maximum size of loans the GSEs can buy from the current cap of $417,000 in the majority of housing markets.

"I don’t think it’s FHFA’s role to contract the footprint of Fannie and Freddie," Watt said.

Watt also announced that the FHFA won’t be expanding eligibility or time limits for the Home Affordable Refinance Program.

Further, he said, the government sponsored enterprises Fannie Mae and Freddie Mac will also be directed to expand their credit boxes.

“(FHFA will) maintain, in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive and resilient national housing finance markets,” Watt said.

The GSEs will be allowed to extend waivers to lenders that would allow them to avoid the cost of put-backs.

Here's some of the best industry reaction from the Twitterverse. (Retweets aren't endorsements):