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Federal Housing Finance Agency (FHFA) director Mel Watt will testify before the Senate Committee on Banking, Housing, and Urban Affairs in an open session on Wednesday, November 19.
Wednesday will mark Watt's first time to testify before the Senate Banking Committee since he was appointed director of the FHFA in January. The subject of the hearing will be "The Federal Housing Finance Agency: Balancing Stability, Growth, and Affordability in the Mortgage Market." The meeting is scheduled to take place from 10 a.m. to 12 noon eastern standard time and will be webcast live on the Senate Banking Committee's web site.
Watt has sparked controversy in recent months by announcing the FHFA's intention to expand the credit box by loosening the tight lending standards for obtaining a mortgage loan in an attempt to resuscitate the struggling housing market six years after the market collapsed. Critics say that the type of lending Watt is encouraging is what caused the housing market to crash in the first place back in 2008.
Financial regulators have already finalized an overhaul of the mortgage lending rules that would lower the required traditional down payment for a mortgage loan from 20 percent to 3 percent. Advocates of the lower down payment contend that it will make homeownership affordable for many who would otherwise take years to save for a 20 percent down payment, while critics say the lower down payment will result in bigger losses for banks if the loans default.
Prior to the open session on Wednesday, the Committee will meet in executive session to discuss the nominations of Lourdes Maria Castro Ramirez as assistant secretary of Housing and Urban Development and Therese W. McMillan as federal transit administrator for the U.S. Department of Transportation. Both nominees are from California.
