Newspaper article International New York Times

Cautious Steps Are Taken to Lift U.S. Housing Market ; Federal Regulator Avoids Making Big Changes to Mortgage Institutions

Newspaper article International New York Times

Cautious Steps Are Taken to Lift U.S. Housing Market ; Federal Regulator Avoids Making Big Changes to Mortgage Institutions

Article excerpt

Mel Watt, director of the Federal Housing Finance Agency, laid out modest plans to help potential home buyers.

The United States housing market is finally on the mend, but any major transformation in the government's role in the housing economy does not appear to be on the agenda of a top federal housing regulator.

On Wednesday, in his first on-the-record meeting with reporters since becoming director of the Federal Housing Finance Agency more than a year ago, Mel Watt came across as a cautious tinkerer, one who is hesitant to make sweeping changes that might be perceived as exceeding his mandate as the overseer of Fannie Mae and Freddie Mac, the government-owned institutions that back most home loans.

Mr. Watt, a former congressman from North Carolina, succeeded Edward J. DeMarco, who was criticized as being reluctant to introduce programs to help struggling homeowners.

Since assuming the job, Mr. Watt, a Democrat, has started a handful of plans intended to strengthen the housing market, including encouraging down payments as low as 3 percent of the purchase price for buyers who are short on cash.

That plan addressed concerns from housing advocates who complained that credit standards that once were so loose they ensnared people who could not afford loans had swung too far in the other direction since the housing bubble burst.

But some housing specialists have criticized the plan as going so far that it could open the door to potential defaults, fearful it could prompt a repeat of some of the worst aspects of the housing crisis. Mr. Watt dismissed those complaints, saying the plan included credit counseling and other measures that would keep buyers on track with payments.

Whatever the merits of the plan, it is doubtful it will have much impact on the overall housing market. Mr. Watt said on Wednesday that the plan probably would attract only a small number of people. …

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