FHFA’s Watt: It’s Not My Job to Start the Conversation About Changing the PSPAs

Inside Mortgage Finance

February 4, 2015

By Paul Muolo

Federal Housing Finance Agency Director Mel Watt on Wednesday said the agency will not approach the Treasury Department about changing the terms of the preferred stock purchase agreements that govern the conservatorships of Fannie Mae and Freddie Mac.

“I don’t think it’s my responsibility to start that conversation,” Watt said in a morning briefing with members of the media. Regarding changing the PSPA agreement, he added: “That’s not my decision to make.”

In late 2012 the Treasury Department amended the PSPA, allowing the government to “sweep” almost all of their profits. The capital reserves were set at $3 billion for yearend 2013 with a $600 million decline each year thereafter until their capital cushion hits zero.

With Fannie and Freddie on solid financial footing once again, some factions of the mortgage industry believe the two should be allowed to rebuild capital by retaining some of their profits.

Watt told reporters: “In Treasury’s view, it’s a legislative decision” to change the terms of the bailout agreement.

pmuolo@imfpubs.com

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s