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POLITICS: PennAve

Fannie Mae, Freddie Mac regulator aims to boost low-income lending

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Politics,PennAve,Joseph Lawler,Economy,Fannie Mae and Freddie Mac,Housing,Mel Watt,FHFA

The regulator in charge of Fannie Mae and Freddie Mac wants them to lend to more low-income families.

The Federal Housing Finance Agency, the agency in charge of the two bailed-out government-sponsored mortgage enterprises, announced Friday a proposal to raise its goals for low-income housing.

The proposal calls for the agency to buy more refinancing mortgages for low-income families and to increase Fannie Mae's goals for low-income families in multifamily units. It also would set a new goal for low-income families in smaller multi-family units.

Fannie and Freddie purchase loans to bundle into securities and provide insurance on those loans to cover lenders in case of a failure. They do not provide home loans directly.

The two government-sponsored enterprises were taken into conservatorship by the FHFA during the financial crisis in 2008, when they faced imminent failure because of their exposure to bad home loans.

FHFA Director Mel Watt took control of the agency early in 2014, making Friday's proposal the first he has offered for the agency's housing goals, which are required by law. In May, Watt signaled that he would reverse course from his predecessor, Edward DeMarco, and steer the agency away from shrinking Fannie and Freddie's market footprint and toward expanding mortgage credit to more families.

The two businesses are dominant forces in the mortgage market, accounting for more than half of all new home loans in 2013, according to the Urban Institute.

The FHFA will accept comments on the proposal through October.

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