GSE Regulator: Stabilizing Housing 'Biggest Challenge'
09 Februar 2009 - 9:28PM
Dow Jones News
If the Bush administration and Congress had succeeded in passing
a regulatory overhaul for Fannie Mae (FNM) and Freddie Mac (FRE)
earlier than this year it may have prevented them from being taken
over by the government, the firms' regulator said Monday.
James Lockhart, director of the Federal Housing Finance Agency,
said in a speech in Las Vegas that he discussed the issue with
former President George W. Bush just days before President Barack
Obama took the oath of office.
"Although he already knew the answer, he asked me whether
getting GSE reform legislation several years earlier would have
prevented the [companies'] problems," Lockhart said. "My answer was
simply, yes."
The two government-sponsored enterprises were put under
government control in September amid concerns about their
capitalization and solvency. The Bush administration had for years
sought to tighten oversight of the firms, but bickering with the
members of their own party who controlled Congress, as well as with
Democrats, prevented any action on legislation until last
summer.
Lockhart defended the decision to put the firms under government
control, saying that without the move the firms would have had to
"pull back dramatically from the market, which would have
accelerated the downward spiral."
In the speech to the American Securitization Forum, Lockhart
also pressed those involved with the mortgage-backed securities
market to do more to help stem the record numbers of foreclosures
that have been a root cause of the current credit crisis. He called
stabilizing the housing market "the biggest challenge we face," and
said private industry participants need to be more aggressive in
working with struggling homeowners.
"There will be no excuses going forward not to aggressively
pursue standardized modifications to prevent foreclosures and
lessen their negative impact on communities and the nation's
economy," Lockhart said in his prepared remarks.
Mortgage servicers need to embrace streamlined approaches for
reworking mortgage loans and keep borrowers in their homes,
Lockhart said. He praised an ASF program to create a standardized
loan modification program but said "it is taking too long."
"These are extraordinary times, and we need extraordinary
actions," he said.
Lockhart also said that he is hopeful that the Obama
administration's plan to use the second $350 billion of the
Troubled Asset Relief Program will include some help for private
mortgage insurance companies.
-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273;
michael.crittenden@dowjones.com