US Housing Regulator Keen On Enhanced Support For Financially Backward Borrowers


The improving picture in US real estate sector has prompted the regulatory entities to take p measures   to boost the reviving sector and bring it out of the shadows of housing bubble. The U.S. housing finance   regulator has asked Freddie Mac and Fannie Mae to focus on citizens belonging to lower income groups.   The Federal Housing Finance Agency has made it clear that two govt owned housing finance agencies   should pay attention to Americans with low income and offer more support to them.

The FHFA unveiled proposed goals for these 2 giants for the years 2015-2017.These are meant for   implementing the view of Mel Watt, the agency chief to broaden housing credit access. The FHFA   revealed it thinks Freddie Mac should increase number of loans for multifamily buildings as well as   apartment buildings inhabited by low-income people. The target should be increased in the next few   years from 200000 to 230000, as per the agency.

It is quite well known that the two housing finance giants of the USA were rescued by taxpayer’s   money during the financial debacle of 2008 that marred US economy. Since then the firms were   brought under control of the federal government. While the two giants don’t lend money upfront, they   purchase mortgages from lenders. Then they sell those mortgages as packaged securities equipped with   government guarantee. They work with majority of U.S. mortgage lending companies, as it is.

As per the new proposal submitted by FHFA, Freddie Mac and Fannie Mae will ensure low income   group families comprise of 23 percent of all single-family home mortgages bought by them. They will   hike purchasing mortgages in areas inhabited by low-income group belonging to minority populations.   Under the new proposal the 2 housing finance behemoths will step up amount of mortgage refinancing   operations aiming low-income group Americans.

The root of FHFA proposal was born when Watt assumed his post in January. He was chosen by   President Barack Obama to head the agency. He has been trying to reduce loan size limits offered by   these two giants since his arrival. This however, may not go down well with the Republicans. Some of   them are of the view policies to support home loan access for impoverished lot was a factor leading to   the U.S. housing bubble burst.

The proposal comes at a time when a Freddie Mac survey indicates average rate for fixed mortgage for   30-year duration has dipped to a record low. The average rate for 15-year duration fixed mortgage was   estimated 3.25%. The survey which was revealed a few days back shows average start rates for variable   mortgages has shot up a little.

In the recent times, a surge in US real estate sector has been noticed by industry veterans and financial   watchdogs alike. The shadows of judicial foreclosure still hanging over properties in certain US states   but the number of such cases are on decline. The FHFA proposal is aimed at reviving the housing finance   sector while ensuring the buyers at lower end of the spectrum do not suffer.

The author is associated with real estate industry for many years and also writes on real estate   investment, mortgage, financing and personal loan issues. He suggests checking with for   personal loan and related issues.

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