FHFA Director Seeks To Streamline Rules

Washington, DC, Oct. 21, 2014 -- The Federal Housing Finance Agency plans to make reforms that could help increase mortgage credit availability.

FHFA Director Mel Watt told the Mortgage Bankers Association that he hopes to relieve bottlenecks that should help spur the market.

In addition, he said, he supports the return of the 97% loan-to-value product at Fannie Mae and Freddie Mac, which purchase the vast majority of home loans.

Rules are in place regarding when a lender has to buy back loans from Fannie or Freddie when there are problems with the loans. Lenders have complained about arbitrary enforcement and believe that minor loan defects would force a repurchase.

The exclusions are open-ended and make it difficult for a lender to predict when and if Fannie Mae and Freddie Mac will apply one of them, Watt said.

The idea is that by making the rules clearer and more precise banks will be more confident about making more loans to first-time home buyers or those who might have more credit risk.