Markets trade at all-time highs amid Watt’s comments
The nation’s stock markets hit all-time highs on Tuesday helped by the remarks of a top housing regulator who signaled an expansion of credit availability for more borrowers.
The Standard & Poor’s 500 index finished the day at 1,897, up 0.04 percent, for its second straight record-high closing.
{mosads}The index also hit a daily high, eclipsing 1,900 for the first-time ever to 1,902 before losing some of those gains and finished at 1,897.
Meanwhile, the Dow Jones industrial average climbed 19 points to a record level of 16,715 and reached its own intraday high of 16,735.
The Nasdaq fell off the pace, dropping 13 points, or 0.3 percent, to 4,130.
A Tuesday morning speech by Mel Watt, director of the Federal Housing Finance Agency (FHFA), helped boost the stock of the firms the agency oversees, mortgage giants Fannie Mae and Freddie Mac.
Fannie’s stock was up 7.8 percent while Freddie’s rose 6.9 percent.
As Congress wrestles with bipartisan legislation, Watt laid out several priorities of the government-controlled enterprises, which were taken over in 2008, with a focus on providing greater credit access to more borrowers.
Watt’s first speech since taking over the agency in January got high marks from housing industry experts, too.
David Stevens, president of the Mortgage Bankers Association (MBA) said that “Watt is showing that he has hit the ground running and put a lot of thought into the path he intends to take with the two companies.”
“The housing recovery has been hampered by the uncertainty surrounding the future of the secondary mortgage market and Director Watt’s remarks should help ease some of those concerns by providing a clearer roadmap for the short term,” Stevens said.
“I was very pleased to hear him focus on issues around access to credit for qualified borrowers and ensuring sufficient liquidity to provide a variety of housing options to lower- and middle-class Americans, both buyers and renters alike.”
There is a rising sense of urgency about passing bipartisan housing finance reform legislation even amid a stall in buidling broader support for a bipartisan bill crafted by Senate Banking Committee Chairman Tim Johson (D-S.D.) and ranking member Mike Crapo (R-Idaho).
The bill, despite its inability to garner much more than 12 votes on the 22-member panel is set for approval on Thursday.
“While FHFA can help stabilize the present system, reform for the future is still needed,” said John Dalton, president of the Financial Services Roundtable’s Housing Policy Council.
“Congress should not give up on legislation to create a long-term plan for winding down Fannie and Freddie and returning the housing market to a system based on more private capital and participants.”
The National Association of Federal Credit Unions (NAFCU) said it was pleased with Watt’s announcement that his agency plans to keep its policy of allowing debt-to-income ratios above 43 percent for some loans purchased by Fannie and Freddie and that FHFA will not reduce the current loan limits.
Carrie Hunt, NAFCU’s senior vice president of government affairs and general counsel, said credit unions need more flexibility in providing mortgages and prefer to “avoid unnecessary changes that could disrupt the housing market.”
Watt also said FHFA will seek comments on guarantee fee increases, which he postponed from a scheduled increase earlier this year.
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