The FHFA director is expected to defend his proposal on expanding credit, including the 3% down payment plan, in front of Congress this Wednesday.
Mel Watt, director of the Federal Housing Finance Agency (FHFA), will testify in front of the Senate Banking Committee this Wednesday. The appearance will be one of the first times that Watt, a former Democratic lawmaker, has been before Congress as the director of the FHFA since he took over the job in January.
The FHFA director is expected to defend his proposal on expanding credit, including the 3% down payment plan, in front of Congress, while looking to gain supporters. However, Watt does have the authority to offer the loans without congressional approval.
In a speech at the annual Mortgage Bankers Association convention in Las Vegas last Month, Watt said Fannie Mae and Freddie Mac have reached an agreement with lenders that better define bad practices that would trigger penalties for lenders.
The clarification is part of a broader push to unlock tight credit after lenders had to repurchase billions of dollars of bad mortgages they sold to Fannie Mae, Freddie Mac and private investors. Currently, Americans are experiencing the tightest credit market in 16 years, which lenders have blamed on penalties.
Watt has received both criticism and praise for his plan. Issac Boltansky, an analyst at Compass Point Research & Trading LLC in Washington, described the situation to Bloomberg News as a lose-lose. “Is there a nice way to say, he’s damned if he does and he’s damned if he doesn’t?”
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