As stakeholders continue to battle with the government over what they say should be their share of Fannie Mae and Freddie Mac's profits, the regulator in charge of overseeing the two GSEs says he's not in a position to act on that situation.
In a meeting with reporters on Wednesday, Mel Watt, former U.S. representative and chief of the Federal Housing Finance Agency (FHFA) since December 2013, discussed a number of key issues facing the GSEs and the agency, touching on topics ranging from recently introduced low down payment programs to the often debated subject of principal reduction for struggling homeowners.
One thing Watt says he has no plans to change is the GSEs' current bailout agreement with the government, which since 2012 has allowed the Treasury Department to sweep nearly all of their profits.
Despite protests and lawsuits from politicians, industry groups, and investors about the terms, Watt told reporters he doesn't perceive "that it's [his] responsibility to start that discussion," according to the Wall Street Journal.
"I inherited a set of agreements," he said. "I know why they were put in place, basically as a quid pro quo for rescuing Fannie and Freddie. ... I just have to live with it."
Another issue he stayed relatively quiet on was the Home Affordable Refinance Program (HARP), which is set to expire at the end of this year. Since debuting, the program has reached more than 3 million U.S. homeowners, though its numbers have fallen off dramatically over the last year.
While some industry participants say they would like to see a new expansion to allow more homeowners to refinance under HARP, Watt said that's not in the cards.
On the topic of Fannie and Freddie's recent move to lower down payment requirements to 3 percent for qualified borrowers, the FHFA leader kept up the same kind of defense he offered to Republicans critical of the change.
"There's not the kind of correlation that people say there is between a down payment and paying a loan," he remarked, adding that the new loan programs are substantially different from the types of offerings that led to the housing crash.
Finally, Watt also discussed the idea of reducing principal on severely underwater properties, a strategy that this predecessor, Edward DeMarco, was staunchly against.
While noting that the idea had never been taken off the table, he said that any cuts will be "substantially narrower" than what some housing advocates have called for, adding that the focus would be to reduce the risk to both the GSEs and taxpayers.
"Reducing everybody's principal would cost taxpayers billions," Watt said.