she envisions a few changes. >> there is a certain lack of discipline, sometimes a point is repeated it too many times in a story or there are three "making the same point when one would do. >> she will discuss her career, the book, and the future of "the times," tonight on "q&a." >> on "newsmakers," edward demarco. welcome. >> thank you for having me. >> we have the housing correspondent of writers. -- reuters. and we have another. hello.

>> what about the program? >> we introduced this program in conjunction with the obama administration in the first week of that administration as a package of effort to assist the housing market. what is unique about this program is it is designed to help borrowers who are remaining current on their mortgages but because of declining house prices and problems with obtaining private mortgage insurance they may have been locked out of trying to refinance their mortgage. when people get a mortgage, they are usually paying for the right to pay that mortgage early and

refinance into a lower rate. we see rates coming down, but there is a set of borrowers who cannot refinance because of these conditions, so this program was established to help them. about 890,000 borrowers have successfully refinanced, but we are taking a look at this in light of the continuing decline in interest rates and the idea that the borrowers were continuing to make good on their mortgages. while we expect maybe more to be able to refinance, should we do things to make this more accessible? so in late summer, my agency in part on a review of how this was working. re-engaged not just with fannie mae and freddie mac but mortgage lenders and insurers to identify what were the frictions, if you will, that were making this program less accessible than we had

anticipated, and so after a careful review of that, we identified some changes operationally and programmatic glee that could be made to allow more borrowers. it may be helpful to go through what borrowers where talking about and what are the existing circumstances that define eligibility. the first thing, we're talking about mortgages that are owned and guaranteed by fannie mae or freddie mac. that is the universe of borrowers. then we are talking about borrowers with mortgages owned by fannie mae and freddie mac whose current loan gamma value ratio is above 80% and who obtained their mortgage sometime before june 2009. we announced several changes to the program to make this program more accessible to these borrowers, and it is really hard to say exactly how many folks

will take advantage of it, but given the changes we have made, we estimate we may be doubling what we have already seen come through the program, and this will help folks to have been locked into not being able to take advantage of today's lower mortgage rates to be able to do so and to also reduce the credit risk to fannie mae and freddie mac. >> some not getting on board, they saw some barriers to the program. you worked to remove some of the risks involved. do you expect the mortgage industry to get on board now? >> that is a great point. in fact, part of the friction i mentioned was making things appear more difficult for lenders to be able to participate in the program, and so we have done a couple of things in terms of refining the program that we expect will make it more attractive to lenders to want to participate.

this is a voluntary program for lenders. but we think that more will want to participate, and we are looking at those who want to do this. one important thing that has changed that will help with this as we have moved something called representations and warranties, basically obligations lenders have to fannie and freddie. these are borrowers who are near underwater on their mortgage or are under water. they have been paying for a number of years. these are seasoned loans. we think these changes will really enhance the desires of lenders to want to participate in the program. >> from the wall street journal, go ahead. >> a program that is designed to help borrowers lower their payments and that will reduce the risk of default for fannie and freddie, but you also made changes to this program which will encourage them to shorten their loan terms, which does reduce the amount of money they

owe over time, but it will also increase their monthly payment. i wonder if there is not some kind of a contradiction there, encouraging borrowers to shorten their amortization period and taking on a higher payment. >> that is a great point. it is not that we are requiring it. it is that we are promoting it as something for them to consider. fannie and freddie have refinanced about 9 million mortgages since early 2009, and we have seen a real trend generally about bar wars and refinancing, refinancing into shorter-term mortgages, and that almost always results in an increase in monthly payments. in fact, depending upon what your initial interest rate is in your new one, you can go with a shorter term and a lower payment.

what we have done with the changes, with respect to the pricing that we are carrying forward into this program and has always been a part of this program, we are eliminating the risk-based fees. if the borrower goes to a 20- year mortgage or less, the advantage for the borrower is that mortgages on shorter-term loans tend to be lower, so they get a lower rate, and they do not have any risks fees, and by paying the loan back, they will pay much less in interest over the life of the mortgage, and if they are under water, they will get above water faster. they will still be able to take advantage using a 30-year fixed- rate mortgage. if they do that, there will be a risk-based the assessment, but with that fee, we are lowering the fees relative to where they have been for this program. we are finalizing what the new fee structure will look like,

but they will be lower. we have to charge these fees because, in fact, by getting into a 30-year mortgage, extending the term from where they are today, and that means especially if they are underwater, that means that fannie mae and freddie mac will be carrying that risk for a longer time, even though the borrowers exhibited a strong capacity and desire to repay their mortgage. >> following up with >> we are seeing a scarcity of buyers at a time when banks are selling more and more properties or closures and distress sales. that will probably be lower during the winter months. last month, york agency solicited 4000 comments from the public on how to convert some of those potential foreclosures into homes that could be rented out, some kind of a joint venture with investors. i wonder if you can give us some sense of when fannie and freddie might be able to do something on an reo, real estate

owned, program. >> for the viewers, some background, fannie mae and freddie mac to have some to wonder thousand properties in their portfolio. these are properties that have gone through foreclosure, and fannie and freddie need to sell them back into the marketplace. this is usually done one market property at a time. what we did is we invited public comment in august and looked at packaging multiple properties, maybe dozens, maybe hundreds, in a geographical way, so here are properties in cleveland or this city or that city, and put them out into the marketplace as a group. and particularly doing it in a way that is attuned to the local market conditions. there is a very strong rental

demand in a particular market, it may be attractive to selling its properties in bulk to an investor or an investor group that is interested in renting these houses in the marketplace. as you know, we received 4000 public comments. we are going through that. we do think we will have some good ideas come out of this. i cannot say which ones or when, but we are turning to this as our next priority. >> barbara. >> there was a speech, and there were also talks of writing down principal. you have talked with democrats over the past month who have actually urged this. does fha's think they will reconsider this in this way? >> the idea of reducing

principal, forgiving principal for borrowers under water on their mortgage has been widely discussed really since the start of the housing crisis and certainly has received a lot of attention in the last 12 to 18 months. the position that the federal housing finance agency has taken with regard to providing principal forgiveness as a form of assisting borrowers with their payment is this. we have looked at the array of tools available to help borrowers who are in difficulty with their mortgage. we have a legal responsibility as the conservative of fannie mae and freddie mac to conserve their assets and assets. we need to minimize the losses on these troubled mortgages that we have. we have evaluated principal forgiveness programs relative to the tools we have in place today, and the conclusion we have reached is that on a stand-

alone basis, principal forgiveness does not accomplish our conservative mandate relative to the loan modifications tools and techniques that we have in place now. the principal forgiveness tool that the treasury department has made part of the modification program is designed to get a bar or who is in trouble on their mortgage down to a monthly payment of 31% of their monthly income. we are doing that today in regard to the loan modification tools that we are using, and, in fact, we often use something called principal forbearance, which means there is a 0% rate of interest being charged on the principle. the principle is not being forgiven. the bar were still has responsibility for the ultimate repayment of villone, so we think that is striking an appropriate balance with the borrowers and also protecting

the american taxpayer, who is standing behind these loans now. >> you just brought up a great point. right now, fannie and freddie are supported by tax funds? >> fannie mae and freddie mac have been in federal consumer to ship for a little over three years, and this is frankly longer than many of us had anticipated when we initiated the conservatorship. what we are really awaiting year, the final resolution, what happens to fannie mae and freddie mac and where the national finance housing system goes is looking in the administration to develop and enact legislation. all the fha can do is really put in may and freddie mac back out there just as they were. there is a lot of discussion going on with lawmakers about the last several years and from

the failure of fannie and freddie, what kind of system and mechanisms do we want in the future, but that policy debate needs to take place, and we will need to wait an act of congress really to get a direction on going forward and with the timeline for that will be. >> how much money is set aside for new mortgages coming in? >> new mortgages at fannie mae or freddie mac made today, whether they are new purchases or refinances or general refinances, there has been a lot of change since conservatorship to approve -- improved the underwriting and the price of these mortgages, so we believe the new business coming in will not result in additional draws from taxpayers. the drawings that are continuing to they are really working with mortgages that were made principally in the. of 2005 -- in the period of 2005

forward. we will be working with that a bit longer. >> "newsmakers" program. we have our guests joining us in washington, d.c.. one from "the wall street journal," joining us from another city. >> there are some industries that just as things became very lax, and today the pendulum has swung perhaps too far to the other side, and the concern is the credit shortage that is putting pressure on prices and these are the main sources of credit. how concerned are you that fannie and freddie may be undermining their recovery by making it too hard to get a loan

today? >> this certainly is a challenge. we clearly have underwriting standards that need to be tightened and things that need to be improved. the risk-based pricing that fannie and freddie have in place today is still less than what a truly private market would have in terms of private capital and taxpayer capital at risk here. so over a longer term, i believe it will need to gradually increase. it has during the period of concern to ship. to your point, it is a concern that in any kind of market, when it goes through this kind of difficulty, tightening too much,

and does that impede the recovery? one of the things we are seeing in analyzing right now is that fannie and freddie have one set of underwriting standards and guidelines for lenders, but lenders are also concerned about what they have in making mortgages, so they are often adding their own additional terms and restrictions on the mortgages that they are willing to make. fannie and freddie do not make loans to borrowers. lenders do, and then the lenders sell those to fannie and freddie, so when we look at the loans that are coming in today, we see that they are underwritten to a tighter standard than fannie and freddie would require. i think this would just need some more time to work through. we have been engaged in some productive discussions about some of these differences, but, you know, at the end, i think it is also going to require a

greater sense of stability and confidence in markets generally and in labor markets. borrowers feel that there is greater job security, and we start to see some improvement in unemployment, these things will also help a lot to improve and encourage the country's housing market. >> a followup if you wish, sir. >> yes, i guess to the point of how the concerts are to ship is being run, there has been more criticism of fannie and freddie of late. there was a review this week. larry summers, and in op-ed in the financial section said that fannie and freddie have been a case of disastrous policy. he criticized the agency, saying it had taken a narrow view of the public interest. he said they had not acted to assure the stabilizing of the u.s. housing market, have taken no account for the narrow financial interests.

i wonder how you would respond to that line of criticism? >> sure. i believe in the statutory authority -- they had been aggressively trying to assist the housing market to ensure that the country continues to have a liquid and stable and functioning secondary mortgage market so that new mortgages can be made, and i think that is what is happening. i also believe we ever responsibility to be minimizing losses from older mortgages that have been made and to provide assistance to homeowners were that assistance is going to lower the cost to the taxpayer relative to the cost of that house going into foreclosure, and i believe we are doing that. we have completed about 1.9 million foreclosure alternative transactions since conservatorship. what dr. larry summers was

arguing for in that editorial i believe goes beyond what congress has appropriated and directed the federal housing finance agency to do, and if the kind of financial assistance for borrowers and brought relief that the allied in his argument is the appropriate public policy, it is my belief that the way the system is supposed to work in this country is that the congress of the united states should enact legislation that provides those funds for that purpose and directs this agency to carry that out. i believe that one of the things being advocated for us to do really goes beyond congress has given us the authority to do, and the funds that have been made available for fannie and freddie were not provided for that kind of brought relief purpose. >> how does that lack of direction from congress make your job harder then? >> well, it does make it

challenging, with the responsibility of being conserving and preserving assets. i say that a lot, but what are we talking about here? when you're talking a assets that originated before conservatorship, and that is about minimizing losses on some poorly underwritten loans. we are talking about mortgages that have been made since conservatorship, and as i said, improving the underwriting, and this allows the mortgage market to continue functioning. then we have the companies themselves, and there are two things there. preserving and conserving their business prospects so they operate, and then the employees of the company, who are quite necessary, to continue to make sure that fannie mae and freddie mac operates. the answer to ship was not really meant to be a longer-term solution, and it does become really challenging to make decisions about long-term

investments that companies are supposed to make in order to continue to be effected in their operations while at the same time, the longer term plan is that you are in a wind down mode with the companies to try to step back their footprint in the mortgage market, and in congress is going to enact legislation that is going to create something new. a longer this goes on, the greater challenge this is for the agency. we have to determine how to do business in the meantime. >> we have a few minutes. a final question? >> yes, about one year ago, there was not much conversation about some items. certainly, in the last six months, it seems that we are perhaps moving on different fronts here, so i am wondering what has changed? has your view of the conservatorship changed? has your view of the market risk changed? >> a couple of things have

changed. first, interest rates have fallen further, said that makes the refinance proposition even more relevant, and we have really had more experience with the program, and we have been able to look back and say, "ok, we have 2.5 years of experience with this program. we really should have enough information to evaluate it and make improvements to it." the situation with foreclosed properties, one year ago at this time, we were all focused on the troubled loans. there was all the discussion that began with respect to robosigning, so one year ago, a lot of the attention was on identifying these problems. a lot of progress has been made on that front, and now as we

start to see foreclosures picking up again, we really want to get moving on figuring that how to handle these. >> edward demarco is the acting director of the federal housing agency. thank you for joining us on " newsmakers." >> thank you. >> what it wants to do. >> people are asking why now, not two years ago could they not have moved in this direction. it is a very small set of borrowers, if you think about it. people who is worth not walking away from their homes, and that a refinancing may be a meaningful reduction in their monthly payment. i am not sure it is going to the stimulus be administration wants. this program when it was first rolled out, it was expected to that 4 million borrowers. it is drastically under that bar. we will have to see how

successful it is. >> what are your thoughts on success? >> well, i think director demarco have a tough job. he has been criticized on all sides. some say this is a band-aid for a market that needs a whole lot more help. others say we are doing too much, that we should be focused on getting the bottom of the housing market and getting the foreclosures through. he is getting a lot of criticism from all sides. it is a big albatross around the neck of the economy right now, housing, and fannie and freddie are probably the most important actors in housing finance. it is a balancing act. i do not envy the job that he has. >> looking at the rates of the loan, and shortening the loan terms, what was the importance of that question in your mind? >> well, if we are doing

refinancing to stimulate the economy, to get more cash into people's pockets, and if we are doing it to improve the risk, it really means lowering their payment, so now if you're giving them an incentive to make it more attractive to bar for a shorter term, that may actually increase their monthly payment. it may help in the long term in getting them to pay down their debt faster, but it really does not do much if you are trying to stimulate the economy and lower their payments. >> hearing from not only democrats but also larry summers, the way they look at fannie and freddie as opposed to the way they are running fannie and freddie? >> soledad it as absorbing all of these taxpayer dollars. they want to see an end to that. democrats want to see something done so their constituents are not facing declining values and increased foreclosure rates.

i think that he made a really good point. he does have the ability to unlock what fannie and freddie can do for housing. the question is, how much do we need to rely on housing? is there going to be another sector that can push us forward? which are growing now but not fast enough. >> and you followed up with a question about writedowns that will be part of the conversation going forward. >> yes. it is definitely a piece of the puzzle. they had a government panel meeting last week, and he said he would take a look. today, it seemed that it seems it is off of the table. fannie and freddie are in the form they are in now. >> i went to thank you for joining us on "newsmakers." our guest in d.c. and also our guest joining us from new york, thank you for being with us on

"newsmakers." [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> i do not want every story to be 1800 words. >> last month, she believes the times is more replaceable than ever but also envisions a few changes. >> there is a certain lack of discipline. sometimes a point is repeated too many times and a story. there are three quotes making the same point where one would do, and i would like to see a variety of storylines. >> she will discuss her career, her new book, tonight on c- span's "q&a." >> this week on "prime minister's questions," prime minister david cameron discusses the euro zone crisis, affordable housing, and tougher laws for those driving under the influence of drugs.

this is tonight on "c-span's. >> joe biden was a featured speaker in arlandria. he outlined promises obamamania and discussed the challenges of working with congressional republicans. this is one hour. >> good evening, florida democrat. are you fired up? are you ready to go? we are ready to keep this fort barack obama and joe biden. are we not? i am so proud to be here tonight in my home state of florida, and thank you so much for your introduction, for your leadership, to your commitment to our party and our values. you are doing an incredible job. look at the turnout. this is the largest turnout we have had at a dinner like this for years, and that is thanks to rod smith's