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Housing agencies signal changes to increase mortgage lending

Housing Agencies Signal Changes To Increase Lending
Industry News

Uncle Sam steps up efforts to awaken the sluggish housing recovery.

FHFA's Director Mel Watt, conservator of Fannie Mae and Freddie Mac has proclaimed that Fannie and Freddie’s loan limits— the maximum loan amounts they can purchase from primary lenders — will remain at their current levels.

The decision to hold firm on the loan limits should do a lot to bolster lending to buyers of more expensive houses.

The director also told lenders that Fannie and Freddie would not force them to repurchase loans that have one or two late payments during the first 36 months after the loans are acquired by either company.

By relaxing the payment history requirements, the FHFA is allowing the GSEs to grant repurchase relief from delinquent loans that originally passed lenders’ quality control reviews, presumably giving them a greater comfort level for lending.

Watt said his goal at the helm of the FHFA is to “foster liquid, efficient, competitive and reliant housing finance markets” while lawmakers on Capitol Hill grapple with housing finance reform legislation.

​The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $5.5 trillion in funding for the U.S. mortgage markets and financial institutions.

The Department of Housing and Urban Development also announced rule changes of its own designed to make lenders feel more comfortable with FHA-financing and allow them to lend to qualified borrowers across the entire credit spectrum. “We want to create an environment that encourages responsible behavior and provides clear rules of the road so lenders can originate loans without fear of unanticipated consequences,” said HUD Secretary Shaun Donovan.