Marginal Impact
One of Thompson’s former colleagues, David Stevens, who served in the Obama Administration as the U.S. assistant secretary of housing and Federal Housing Administration (FHA) director, applauded the policy but said its impact will be marginal due to increased mortgage rates and higher home prices.
When told about this critique, Thompson’s enthusiasm jumped through the Zoom screen when she replied, “Marginal impact is better than no impact!
“And we really think that a decrease in upfront fees and borrower costs is certainly better than an increase or doing nothing,” she added, saying the FHFA thinks 1 in 5 borrowers will be eligible for the new policy.
At least one independent mortgage broker shares Thompson’s optimism for the policy.
“I think (the policy change) is a good thing because ultimately those fees get passed along to the consumer and it determines how much (of a mortgage) someone is able to qualify for because it affects their mortgage payment,” said mortgage broker Shawn Williams, president of College Park, Md.-based Fortis Mortgage. “I haven’t put my finger on how much of an impact it will have given interest rates, but it is going to make houses more affordable for minorities and low-income borrowers seeking to buy.”
Director’s Policy
One of the things that impressed Stevens was that the policy came from her, not the Biden Administration.
“It really reflects Director Thompson’s mission that she has vocally promoted since she took (her current) role,” he said. “She has been very public about wanting to expand home ownership opportunities, particularly for African Americans and Latinos.”
“We did not get any push from the Biden Administration on this policy,” Thompson confirmed during the interview. She went on to emphasize that the FHFA is an “independent agency and our independence is valued.”
Asked how the FHFA will measure the policy’s effectiveness, she said, “I look at the numbers. Strictly the numbers. If you don’t have measurable, quantifiable goals, then, there’s absolutely no way to evaluate whether a policy has been successful or not.
“We’re fact driven, and we want to make sure that we’re measuring these initiatives that we’re putting in place,” she added.
“One of the things I committed to as acting director, and you can see this in the scorecard that we publish,” Thompson continued, “we placed a pricing review as a priority in the 2022 scorecard and the strategic plan.”
In addition, she said, since the “enterprises (Fannie Mae and Freddie Mac) are accumulating capital and we want to make sure they’re achieving some viable returns on that capital. So, there are a number of strategic priorities that we have, and we believe that the pricing changes that we have made and will make are going to further our publicly stated goals.”