Mel Watt, the current director of the Federal Housing Finance Agency (FHFA) has yet to deliver an annual strategic plan, normally released in the first quarter. The plan, known commonly as a "scorecard," usually details specific plans and targets for mortgage companies, and its absence has some housing market experts concerned.
Watt took over as director of FHFA in January, and commands great influence over the policies of Fannie Mae and Freddie Mac, which according to Reuters, own or guarantee about $5 trillion in U.S. mortgages. Both companies were seized by the government in 2008 after a well-publicized near collapse.
So far, Watt's only policy change as director was to set aside a decision by his predecessor Edward DeMarco to increase the loan fees Fannie and Freddie currently charge, stating that the policy could diminish mortgage availability.
Professionals and investors in the housing market are not the only ones confused by Watt's silence. The article reports that talks on overhauling the housing finance system have intensified on Capitol Hill, and legislators had hoped Watt would have provided more commentary and guidance for the discussions.
The Chicago Tribune reports that sources inside the FHFA believe Watt is largely comfortable with the current direction of the two companies and they do not expect to see dramatic changes. "He's being a little cautious, but that's probably good at this point," said James Lockhart, a former director of FHFA. "It's a big job to oversee two of the largest financial institutions in the world, and getting inside those behemoths is always an issue."
While the FHFA remains silent, individual lenders can use loan management software to maintain an acceptable level of risk in their portfolios, while still doing their best to serve their customers. Investing in application processing software can allow lenders to follow best practices and ensure they are mitigating the risk of poor mortgage performance.