New regulator Watt signals shift in U.S. housing policy
By Margaret Chadbourn
WASHINGTON (Reuters) - Mel Watt, who was sworn in on Monday to head the agency that regulates mortgage finance firms Fannie Mae FNMA.OB and Freddie Mac FMCC.OB, has signaled a new approach to U.S. housing policy that will put more of an emphasis on ensuring access to credit.
Watt, a 68-year-old North Carolina Democrat who spent more than two decades in Congress, is the first permanent director of the Federal Housing Finance Agency in four years.
"Today's housing finance system is one of the keys to our economic recovery," Watt said in a statement after being sworn in. He said he hoped to "develop a strong foundation for moving this system forward for the benefit of all Americans at this critical point in our nation's history."
Even before taking office, Watt had said that he would delay a series of Fannie Mae and Freddie Mac loan-fee hikes that were announced by the FHFA a day ahead of his confirmation by the U.S. Senate in December. Industry and consumer groups decried the increases as driving up the cost of borrowing.
Jaret Seiberg, a senior policy analyst at Guggenheim Securities, said there were high hopes that Watt would "focus on expanding the mortgage credit box".
"The open question is how effective he will be and how strongly he will endorse that role," he said. "The first few months are likely to tell the market a lot about his tenure."
As the overseer of government-controlled Fannie Mae and Freddie Mac, Watt has authority over two companies at the heart of the U.S. housing finance system.
The companies, which back about 60 percent of U.S. home loans, buy mortgages from lenders and package them into securities on which they guarantee payments of principal and interest. In doing so, they serve as major sources of funding for hundreds of banks. Continued...