Economy, and the market is set to get a bit looser under Mel Watt, the new director of the Federal Housing Finance Agency (FHFA). While his predecessor, Edward DeMarco, proposed a third version of the Home Affordable Refinance Program (HARP 3) in 2013, Watt has taken a different approach to loosening mortgage lending regulations.
Watt has made clear that he does not see a need for HARP 3 and instead believes that the existing programs are sufficient to help Americans refinance their mortgages. However, he is taking a proactive approach to mortgage lending in order to make it easier for Americans to attain mortgages. To this end, Watt is looking to relax the credit score requirements for mortgage loans and strengthen the "ability to repay" standard in order to make it easier for borrowers to qualify for a loan. Furthermore, Watt is taking a hard look at fees charged by Fannie Mae and Freddie Mac and looking for ways to reduce or eliminate them in order to make mortgages more affordable.
Additionally, Watt is striving to make the mortgage approval process much simpler by introducing a new rule that would streamline the process of providing evidence of a borrower's financial capability. Moreover, he intends to simplify the paperwork required and ensure that all documentation is consistent across lenders. As a result, borrowers should have an easier time getting a mortgage and it should also become easier for lenders to approve a loan application.
Finally, Watt plans on introducing new rules and regulations that will better protect consumers when taking out a mortgage loan. These rules and regulations could include stronger consumer protections regarding the origination of loans, ensuring accuracy in the disclosure of fees and closing costs, and even prohibiting certain types of predatory practices.
In conclusion, Mel Watt is taking a different approach to mortgage lending than his predecessor, Edward DeMarco. He has no plans to pursue a HARP 3 program, but is instead making a concerted effort to make it easier for Americans to attain mortgages. He is relaxing credit score requirements, eliminating unnecessary fees, simplifying the documentation process, and introducing new consumer protections. All of these changes should result in lower interest rates for borrowers and more access to credit for those who need it. This should help stimulate the housing market and, in turn, the overall economy.
This article was contributed on Nov 04, 2023
