On November 19, Federal Housing Finance Agency (FHFA) Director Mel Watt testified before the Senate Banking Committee on the future role of the Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, in the mortgage market. Watt was quickly bombarded with questions about the agency’s plan for the GSEs to buy mortgages with down payments as low as 3 percent.
Senator Mike Crapo (R-ID), among others, said he was “troubled” by the agency’s low down payment loan plan, emphasizing that it was a risky strategy given the recent housing meltdown. In addition, Senator Pat Toomey (R-PA) repeatedly questioned Watt’s decision to suspend the agency’s plan to increase g-fees, or guarantee-fees that the GSEs charge lenders, originally proposed by his predecessor Ed DeMarco. Watt responded by saying that FHFA plans to unveil a new framework next year for how the GSEs will set g-fees, but wanted to fully review the previous policy before making any related decisions.
While the hearing focused mainly on single family issues, Director Watt stated in his written testimony that supporting affordable rental housing continues to be a priority for the agency. Specifically, he emphasized that FHFA did not include a mandate to decrease multifamily production in its 2014 Strategic Plan for Fannie and Freddie, a decision that NMHC/NAA and other industry groups worked closely with the agency on.
“In establishing this policy, the focus is not for the Enterprises to compete where there is private sector coverage of the multifamily market,” said Watt. Instead, he added, it is “to ensure that affordable housing is available and that the housing needs of people in rural and other underserved areas are met, including areas that rely on manufactured housing.”
NMHC/NAA remain consistently involved with Director Watt and his staff and recently submitted comments on the agency’s proposed 2015-2017 housing goals for Fannie and Freddie.
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