"Housing finance is such a critical part of the economy," Federal Housing Finance Agency Director Mel Watt said Tuesday. "To stop, or stand in place, is just not an option."
In his first major speech since taking over the agency in January, Watt did not weigh in on the various proposals in Congress to overhaul housing finance policy. His remarks came as the Senate Banking Committee considers legislation that would eventually phase out Fannie and Freddie's central role in the mortgage markets. A committee vote could come Thursday.
"Our goals are consistent with operating Fannie and Freddie in the here and the now, and we'll do that until there is legislation passed," said Watt, a former North Carolina congressman and influential member of the Financial Services committee before President Obama nominated him to the housing post.
But without waiting for Congress, Watt did announce a number of policy shifts for Fannie and Freddie, the government-run companies that help guarantee about half of all mortgage loans:
• Reversing a proposal it made last year, the agency will not reduce the size of mortgage Fannie and Freddie will back. Current rules limit those mortgages to $417,000 in most of the country and as big as $625,500 in higher-cost areas. Watt said the policy shift came after the agency heard "concerns about how such a reduction could adversely impact the health of the current housing finance market."
• Fannie and Freddie will continue to back loans even when the borrower misses two mortgage payments in the first three years after a lender acquires the loan. Under current standards, Fannie and Freddie can force lenders to repurchase those mortgages, which made those lenders ! reluctant to make the loans in the first place. That, Watt said, "undermines the goal of improving access to mortgage credit for creditworthy borrowers."
• The agency will launch a foreclosure relief pilot project in Detroit, which could give more relief to homeowners and help get foreclosed properties back on the market more quickly. "We believe this will be a win-win for hardest hit communities and for our conservatorship objectives," Watt said.
Michael Calhoun, the president of the Center for Responsible Lending, said the speech at the Brookings Institution Tuesday was "vintage Watt" — an attempt to make home ownership accessible for more people, but with an eye for stability.
"He is for broad access, but only sustainable access," he said. "I think one of the things that makes him well suited for this job was that middle-of-the-road approach you heard here today."
Those policy changes come as Congress debates whether to revoke the charters for the two government-sponsored mortgage giants. The government forced Fannie and Freddie into conservatorship during the depths of the housing crisis in 2008, putting taxpayers behind the mortgages they guarantee. Fannie and Freddie are now earning record profits for the U.S. Treasury.
The Senate Banking Committee will vote Thursday on a bill that would phase out Fannie and Freddie, replacing them with a system in which private lenders would assume most of the risk of bad loans.
The bill appears to have enough bipartisan support to pass the committee. But some more liberal Democratic senators — including Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio — have withheld their support, seeking assurances that low-income borrowers would still have access to credit and that smaller community banks wouldn't be shut out of the market.
Without the support of more Democrats, Senate Majority Leader Harry Reid, D-Nev., said he will not bring the bill to the floor for a vote, putting the fate of Fannie and Fredd! ie in the! hands of the next Congress.
Follow @gregorykorte on Twitter.
Subscribe via Email 
Subscribe RSS Comments Please leave your comment: 
4.25 (1y: +19%) $(function() { var seriesOptions = [], yAxisOptions = [], name = 'PATH', display = ''; Highcharts.setOptions({ global: { useUTC: true } }); var d = new Date(); $current_day = d.getDay(); if ($current_day == 5 || $current_day == 0 || $current_day == 6){ day = 4; } else{ day = 7; } seriesOptions[0] = { id : name, animation:false, color: '#4572A7', lineWidth: 1, name : name.toUpperCase() + ' stock price', threshold : null, data : [[1361512800000,3.58],[1361772000000,3.45],[1361858400000,3.4],[1361944800000,3.35],[1362031200000,3.27],[1362117600000,3.25],[1362376800000,3.18],[1362463200000,3.13],[1362549600000,3.11],[1362636000000,3.31],[1362722400000,3.44],[1362978000000,3.43],[1363064400000,3.4],[1363150800000,3.45],[1363237200000,3.46],[1363323600000,3.46],[1363582800000,3.51],[1363669200000,3.45],[1363755600000,3.61],[1363842000000,3.56],[1363928400000,3.57],[1364187600000,3.66],[1364274000000,3.42],[1364360400000,3.42],[1364446800000,3.45],[1364792400000,3.55],[1364878800000,3.62],[1364965200000,3.5],[1365051600000,3.6],[1365138000000,3.6],[1365397200000,3.66],[1365483600000,3.64],[1365570000000,3.65],[1365656400000,3.61],[1365742800000,3.62],[1366002000000,3.59],[1366088400000,3.63],[1366174800000,3.59],[1366261200000,3.51],[1366347600000,3.455],[1366606800000,3.39],[1366693200000,3.47],[1366779600000,3.418],[1366866000000,3.37],[1366952400000,3.38],[1367211600000,3.35],[1367298000000,3.36],[1367384400000,3.34],[1367470800000,3.3],[1367557200000,3.34],[1367816400000,3.29],[1367902800000,3.29],[1367989200000,3.33],[1368075600000,3.32],[1368162000000,3.32],[1368421200000,3.31],[1368507600000,3.22],[1368594000000,3.225],[1368680400000,3.15],[1368766800000,3.2],[1369026000000,3.16],[1369112400000,3.15],[1369198800
NEW YORK (CNNMoney) Housing market experts are keeping a close eye on the Federal Reserve as they anxiously await word on whether the agency will start pulling back on its controversial stimulus program, known as quantitative easing. 
