James Lockhart spoke at the American Securitization Forum conference held in Las Vegas this week.
In his speech, Lockhart said that the Federal Housing Finance Agency (FHFA) has a four -pronged strategy: ensuring safety and soundness in a market that is supported by Fannie Mae and Freddie Mac; working with other institutions to keep mortgage interest rates down; focusing on foreclosure prevention; and working with the enterprises to set best practices in mortgage lending.
Lockhart in his speech emphasized that there is much more that needs to be done in terms of foreclusure prevention, adding that making foreclosure the rule rather than the exception has made the situation worse. He also noted the importance of employing a streamlined approach to loan modifications and of determining the proper net present value calculation for mortgage loans .
The director of the FHFA also emphasized the importance of the GSEs, although he said that GSE regulators might have acted too late in curtailing the powers that the GSEs had. He emphasized, however, that to remove the GSEs from the mortgage sector might have "accelerated the downward spiral of the housing market."
Anyway, he added that the proper checks have been put in place. "We placed a 30% cap on their portfolio, stopped them from taking a position in the ABX, encouraged them to raise capital," were among the measures that Lockhart mentioned were put in place to curb GSE growth.