services. i'm sure to get -- i look forward to your input over the next five minutes. good moving on the housing trust fund. i want to commend our colleague, mr. ellison, for organizing a letter, and unless he objects i'd like to put that in the record of these hearings. so i don't request unanimous consent to put this fine letter in the hearing. >> without objection. >> and to commend mr. watt for his actions. first kind of a technical question. the h.u.d. one is being phased out by the new integrated mortgage disclosure form that combines the tila forms and is intended to give consumers a better understanding of all itemized line-item costs of the home closing. i wonder if you're focused on

this sandrule what steps if any you have taken on this rule to make sure consumers are fully informed. >> i believe that is under the protection jurisdiction. we haven't been actively involved in it. i do meet regularly with the director of the consumer financial protection bureau to make sure that we're not at odds, and we're also member of the committee together, which allows us to exchange ideas at that level. but we're not directly involved in that. i'm sure that you're focused more on real estate lending than some of the more general folks involved, and they benefit from your input.

your predecessor pushed for a lower conforming loan limit. you demonstrated your wisdom in going in a different direction. and action that has done more than anything else to impress me with your wisdom. do you see that ugly proposal rearing its head again any time soon? >> well, it has to, because it has to be reviewed regularly. we are almost constantly in the process of reviewing loan limits. so, yes, it will raise its head again. >> i look forward to continued wisdom on your part, and i yield back. >> the chair now recognizes the gentleman from new mexico for

five minutes. >> thank you mr. chairman. thank you, director. i know we haven't alza greed, but i've always admired your plain language and straightforward responses. i find myself admiring that today. as we look back to the problems that put you in the conservatorship, we've found that fannie began and everyone began to expand the number of loans that were given to people that probably shouldn't have gotten them, and the o.i.t. in 2012 found that fannie faha was somewhat responsible because they overlooked the fact that fannie was beginning to relax its underwriting guidelines. they were beginning to buy loans that they said they wouldn't buy. they didn't accomplish that with a change in the law. they accomplished it with variances. i guess my question is, what

are you all doing to see that the agency doesn't go around the rules again? they were being pushed not by the white house. as you said before, you're independent from the white house. i wonder if you're independent from us. it's members of this body who are pushing for the relaxing of those standards so that people can get loans. i hear some of the same language today. what are we doing to make sure this doesn't occur again? >> first of all, at that point, fannie and freddie were not in conservatorship, and so the regulatory role was a lot looser than the conservatorship role that we are playing now. we're involved in virtually every decision that fan sandee freddie makes, and we take very seriously our statutory mandate both to do things safely and soundly and to do things in a way that will provide liquidity

in the housing finance market. that's why i said in my opening statement we're constantly walking that balance. we would be as responsible for those decisions now as fan sandee freddie would be, because they are in conservatorship, and it's part of our conservatorship. >> but someday they'd be out of conservatorship. again, i wonder about the oversight mechanism that will take a look at what they're doing, because it was them that facilitated -- if fannie had not bought those mortgages, it would never pay off. they were able to get rid of them out of the banks and send them on to someone else and let them worry about it, and so as we go through into the future, i worry that the same thing -- i wonder also, so fannie and freddie are making a profit, and so i guess you were talking about the models that you have

done. have you got models that tell you at what rate of growth that we're going to start to experience troubles, and should we increase our surveillance in what rate of growth would that be? >> well, we don't do it at what rate of growth. we do it on a loan-by-loan basis, and we set standards that apply to loans so we make sure we never get to determining where you fall off that cliff or don't fall off that cliff. we're nowhere close to the level of risk that was being assumed -- >> i have a run of business with 50 employees. i find it beyond imagination that you can take a trillion dollar portfolio and look loan by loan. i appreciate you saying it, but i find that really hard to believe. >> i afollow jies. that probably was an overstatement, but we set

standards that have to apply to loan by loan by loan. >> those standards existed before, and under the table or wherever the people who are getting tremendous bonuses at that period of time began to cheat the season system. they began to rig it to get bigger bonuses. until you evaluate human nature, the last one i want to make is that another great pressure in the system was the low interest rate, and so at some point the federal reserve, whether they like it or not, is going to go up on interest rate. that's going to put more pressure in the housing market. i see that if we don't have our ship really right when it goes into the troubled waters of lower growth rate, higher interest rates that we're going to have exactly the same thing, the same problems with an agency that is way undercapitalized. you have to admit that they're in shaky financial shape as we move forward and if we get into troubled waters. with that, i yield back my

time. >> the chair now recognizes the gentle lady from wisconsin, ranking member of the monetary policy subcommittee. >> thank you so much mr. chairman, and ranking member. it is so good to see the honorable director watt here with us. he is near really good form, just the facts and really it's a relief to have you around, that you haven't rode off into the sunset. i would like to start out by making a comment before i engage the director in a question because much has been said today about the credit worthiness with the 3% down and there has been much swim station that lower income borrowers were the cause of the financial crisis in 2008.

and so i just would like mr. chairman to request unanimous consent to put into the record a report done by someone from duke university and m.i.t. >> without objection. >> thank you. and from dartmouth and also from harvard business school. >> the gentlelady will suspend. we seem to have a little audio problem here. try again. >> thank you. this is a 42-page report, mr. director and mr. chairman. but its conclusions are that the higher default rate can be attributed to loans made to middle and upper income folks

and not low-income folks. and so i just wanted to clarify for the one millionth time that the lower income borrowers were not the primary reason for the financial meltdown. i don't know if you have any comment about that research, but i would like to enter that into the record. >> i'm glad i don't have to participate in that debate anymore. >> ok. thank you. i was looking through your prepared testimony and you talked about mortgage servicing and it wasn't really clear to me through your testimony what was the -- was the product -- there hasn't been changes in the compensation structure, better aligning of services incentives with those of the enterprises, and i was

wondering how that translated into better mortgage service fog the customers. >> well, that's a very difficult subject because it's massive. what happened over time is the result of the meltdown, servicing went from just collecting money on mortgages to a much, much more difficult process of dealing with people who were in default. that whole industry has evolved , and most of it was done originally by lenders themselves in house, and much of it now has gone to outside people who specialize in servicing. and that has created a set of issues that we've had to deal with because some of them, even

though they might have been better servicers were not necessarily as financially sound for the long term so we've had to deal with that. there is a wonderful study that was just put out by the urban institute that talks about that evolution and the costs that have been associated with servicing where you can service a loan for like 50% of the loan and now it's up -- or $50, a fee to a servicer. now it's up to well over $2,000 as a result of the increaseed responsibility. but it's a very difficult area and we internally have had difficulty because this whole meltdown has put stresses on

the servicing industry. i made a switch, and it was easy to service when all you had to do was collect money. it is very difficult servicing mortgage now when people recall. >> reclaiming my time. i would assume -- well, i have another question. >> the gentlelady may have another question. she's just simply out of time, so she can submit the question for the record, and the witness can respond. time for the gentlelady has expired. the chair now recognizes the gentleman from north carolina. >> thank you mr. chairman. mr. watt good to see my friend from charlotte. you seem to be relishing your new job, and we wish you well. frankly, we want you to be successful.

as noted by our comments today, we have the concern that of what would come out of the current policies of easy credit. we believe it was complicit in the housing crisis that we have just previously experienced. mel, as you know the former acting director, he proposed these increases for the fees to charge the lenders. under your leadership, you suspended the implementation of those increases. this last december, you made a public statement or report that suggested how we should attract new capital into the secondary mortgages, and i could quote them. they stated policy makers should continue to increase the two g.s.e.'s, guarantee fees to attract new private capital to the secondary market.

and even a small increase in guaranteed fees from the present level would allow private to immediately compete for the highest quality loans. you've also stated that you want to find ways to bring additional private capital into the system in order to record taxpayer risk. now, your own decision, you've chosen to go against the former director, and you've chosen against the taking of the c.b.o. of if you are not willing to increase the guaranteed fees, what additional steps would you recommend to increase the role of private capital and to decrease the role of exposure to fannie and freddie and frankly, the american taxpayer. >> let me put in perspective one thing. i've never done anything in opposition to the former acting director. i have the greatest amount of request for the acting director

and the decisions. so i just want to be on record as making that clear. and i've taken some abuse for saying that, but i just have to say it. the primary means that we are using is to test different risk sharing models. they've been very successful. we have tripled quadrupled the amount of risk sharing we've done in the one year that i've been there. the goal was $30 billion in 2013. we increased it in the scorecard to $90 billion and shot right past it before the third quarter was over of 2014. we've increased it again in the 2015 scorecard. we're encouraging them to look at different risk sharing

alternative models to do it not just the one that have already proven successful. we've encouraged them to look at whether it is practical to even go back and risk share some of the legacy books of loans. all of this risk sharing we've done essentially has been with new loans, the most pristine loans. we are very active in that space. we're also looking at the questions, the conclusion that you reached that we are not going to change or are going to change i think is premature. we don't know whether or not we're going to change them, and we're taking into account the study that was done our own study, the input that we got to a series of very cogent questions about how g.p. should

be spent what factors should be considered in setting guarantees. when we come out with our report hopefully by the end of this quarter, i think we'll add a lot of information. in fact, even in the request for input we put a lot of information out there that people have never known about how g.p.'s were set. >> quickly may i ask. you have suggested you stated one of your changes is you allowed these down payments to be as little as 3%. you stated well, there's other offsetting measures that you would implement. would you give a clarity to what those are? we believe easy credit, we saw the chart earlier, was a major factor in the current demise. >> please answer, please. >> homeownership counseling, mortgage insurance private

mortgage insurance, higher fico scores i mean, there are a number of factors we're taking into account that would offset the lower down payment. >> the time of the gentleman has expired. the chair now recognizes the gentleman from minnesota. >> thank you mr. chairman and ranking member. i just wanted to say that i was glad to see that we had 61 members of congress including every half of this committee -- almost half of this committee, agree that your action to understand the temporary suspension of contributions to fan sandee freddie to the house trust fund was the right thing to do. very happy about it. it's already in the record, so i don't need to enter it in, but i want to make note of that. i also want to comment too that

it's true that you have to face a lot of questions from folks who believe the real problem of the crisis of 2008 was g.s.e.'s and borrowers, but it's also true that you have to contend with people who think that you ought to be moving faster in the other direction. i know that because i've had constituents of mine say well, why doesn't director watt you know, do this and do that and move quicker, things like that. i think one of the other things that your office has done after taking a lot of care a lot of time, a lot of research is decided to review the process the transaction and not doing any transactions and reviewing the policy. i wonder could you talk about some of the thinking that you entertained as you were reviewing that policy and why it is that you came out the way that you did.

>> well, there was a conclusion that if you allowed a borrower to default and then turn around and buy a piece of property at a lower rate that you would be incentivizing that kind of negative behavior. and that had kind of taken hold and was wagging the dog. there probably are 1%, 2%, 3% of the people in the world who could think that far ahead that they would default on a loan and then after foreclosure go back and buy it at a lower price and come out better. we thought the moral hazard, which is what people were causing, were calling that we could minimize that by putting some prudential factors around

that decision, and so that's what we did. it's not automatic that somebody can do that, go back and buy the home back for a lower price. we put a time period on it so that we could test it going forward. to make sure we didn't do something that was irresponsible. but it was a slow research process as every one of these things. you kind of put your finger on something. what i found in this position is that there's nothing generally as simple as i thought it was, right? all of these decisions are very difficult and require good research, and that's what we try to bring to every decision.

>> i also want to say that you've been available to talk to everybody who wants to talk to you. you've met with ordinary homeowners. you've met with policy makers. you have a pretty good staff member. she used to work in my office. she's gone on to bigger and better things, but i'm glad she's landed in the right place over there. can you fwalk all this research you've done. >> well, i think one of the members over here pointed out that they appreciated plain talk. there's a lot of misinformation in this territory and i think the more you can kind of break things down and explain them in terms that borrowers can understand, that the public can understand demystify this

whole process, the better off we are. but most of the outreach we have done and going out has been about specific things that would benefit borrowers such as the hawk program or the neighborhood stabilization initiative in detroit. i've kept a very, very low profile. i have no interest in being in front of a camera. >> the gentleman's time has expired. >> we got a different approach to it now. >> the chair recognizes four or five minutes from pennsylvania. >> welcome back to the committee for a couple of hours anyway. i want to talk a little bit about the 3% down payment program.

fabi mae in its 10-q that it filed with the s.e.c. in 2014 mentioned the program, and here's what they said. they also plan to offer a 97% ratio product to all customers in 2015. to the extent we are able to encourage lenders to increase access to mortgage credit we may acquire a greater number of single family loans with higher risk characteristics than we acquired in recent periods. however, we believe this will continue to have a strong overall credit profile current our standards and product design. it seems to me that fannie mae in its filing has admitted that the program is going result in loans with a higher risk. would you agree with that

assessment? >> i would admit that possibility exists if you're not careful, which is exactly why we're being careful. that was the third quarter analysis and you notice they didn't announce this until december because we were putting all of these con streants around them to make sure that we minimized that risk. >> so when i look at when they file i would not expect to see something like that. you may see something similar to that, yeah, because, you know 10-q's, as you know, are designed to give the public and people out there the worst possible case that you could present to them. >> are they aware of the risks? the administration in 2011 released a white paper entitled

reforming america's housing finance market. page 14 of that document, the administration recommends that the f.a.a. market shares should be reduced. two, f.h.a. should return to its precrisis role as a targeted provider for low and moderate income americans. and three, f.h.a. mortgage insurance should be increased. the administration recommends that a coordination between fannie, freddie and f.h.a. to help ensure the private market not f.h.a. fills the market opportunities created by reform. do you believe the recent policy announcement by h.u.d. affected yesterday to lower f.h.a. annual mortgage premiums by 50 basis points will affect the return of private capital to the market? >> i don't have an opinion on that representative, because h.u.d. is not under -- f.h.a. is not under my jurisdiction and h.u.d. is a part of the administration. we're an independent regulatory body. >> how many new homeowners had

you anticipated with the program? aum i'm sorry? >> how many new homeowners have you participated with the 97% program? >> it is a very, very small percentage of the overall portfolio will be a very small win. we anticipate it will be a very small percentage of the portfolio of both fannie and freddie. i'm not sure i can access them quick enough, but we'll be happy to provide them to you. >>y been talking a little bit about the creditworthiness of people paying back their mortgages. they're able to pay back. we do van issue with people who are underwater. one of the concerns i have is when you have institutions such as fannie and freddie and the scale that they're able to influence the market, i read an article just this weekend, and

you may have seen it in "the washington post" about a family in prince george's county where they have a $550,000 mortgage, but the home is worth $480,000. while that family may continue to pay on that mortgage, there's really another issue here. it's families who do not feel as though they're getting ahead and families who may feel trapped in their house. when we have a program that has a chance to encourage us, we saw a significant increase in mortgages that were underwater following the crisis. what would you say to a family like that who buys into a program? >> they're in a very difficult situation, and i've been in rooms with them and had discussions with them, and all you can do is tell them you regret that they're in a situation and we're trying to make sure that future borrowers don't get themselves in that same situation.

>> the gentleman's time has expired. now the gentleman from delaware. do you want to go next? thraup we go. we got a live one. >> me or the mic? >> both of you. >> i hope this doesn't mean i have to sound as smart as mr. foster. mr. chairman ranking member, thank you for the opportunity to ask a few questions. welcome back to the committee. we certainly miss your common sense and straight talk here and personally i miss your

north carolina drawl over my shoulder. you have said several times you're not going to comment on the specifics that that's a legislative responsibility, but you have made some public comments on whether it's necessary or not. can you comment for us now about the sustainability of the current situation, what we should be concerned about and your thoughts on that without going into any specifics about what we should do? >> well, there's nothing worse i've found in this area of the market than uncertainty. the long they are draws out the more uncertainty there is. so you have that risk and imperative for congress to do something. that's not about what they do. it's about providing more certainty.

>> we have challenges at fan sandee freddie -- at fannie and freddie maintaining an employee base in this environment because they don't know what the future of fannie and freddie is. there are multiple implications that follow from the failure. >> would you say it should be a high priority for us for the congress and administration to get that done? i mean, when i first came here, the former chairman was criticizing the administration for not doing anything on g.s.e. reform. the former ranking member was criticizing the republicans for not doing anything on reform. now, there have been a lot of proposals. i'm part of a team that have come up with a proposal that i'd like to talk to you about. do you think it's time for that to get done? >> well, i would say there are

implications for not doing it for me to put a priority on it i think is an inappropriate role for me because there are a lot of things that congress deals with that are priorities, and that's just not my role to set those. >> so one of the things that our legislation does is invite require private capital to be in a position over an explicit federal guarantee. in some ways similar to the way treasury presented here in this chamber when were a member of the panel four years ago you've done some of that in terms of -- my question is, what is the appetite for private capital to enter into the space and do you have any sense as to what that premium might be for that first loss position?

>> well, there is an appetite. i don't know that i can assess the magnitude of the appetite. i think they're playing an important role in the availability of housing finance in this country private capital that is. we're trying to facilitate that role by taking loans off of their books so that they can make more loans. that was the whole philosophy under which fannie and freddie were founded in the first place. and we're facilitating it through transferring risk back to the private sector. that still does not negate the importance of providing certainty in the future by doing g.s.e. reform. >> well, thank you. a number of us are working on

that, and we've had discussions with members of the senate with democrats and republicans on this committee and hopefully there will be an opportunity in this congress to move something forward that basically contains a federal guarantee to -- i happen to believe -- the question was asked earlier about the importance of a 30-year fixed mortgage, and you had some observations about that. i happen to believe it's important from an affordability perspective, and the only way to sustain that is through some government guarantee. let me just close by thanking you. i was one of the members who signed congressman ellison's letter requesting that you end the suspension of the fee to fund those two housing trust fund and the capital market fund. i appreciate your decision to do that. good luck to you. >> the gentleman's time has expired. the chair now recognizes the gentleman from arizona for five minutes. >> thank you mr. chairman.

>> i truly appreciate and i wish everyone had embraced that your current position is substantially risk management. and i'm not sure a lot of folks appreciate that that really is the core of your job at this moment. but i have a handful of things i wanted to run through, and there's never enough time for all the questions. first one, you had an interesting discussion servicing. i accept that a lot of the servicing can be fairly complicated, but a couple of mechanics for low-cost servicer great, the ability to transfer impaired paper that may need some additional love and touches to a special servicer that deals with impairment issues, how is that harmonization of servicing standards that i believe your folks have been working on? do you know where progress is?

>> we're making progress. we coirnted a different set of circumstances after the meltdown. we went from a situation where lenders were primarily doing their own servicing to a situation where they wanted to get out of the servicing business because it was either too complicated or because they had to have higher capital requirements if they stayed in it, various and sundry reasons. and so a lot of the servicing rights got transferred, and that imposed the responsibility to look closer at not only the ability to service a loan, but whether the longer term implications of that -- are you capitalized well enough to be in this business for the long

haul if things go south? >> my great hope and i know it's complicated, and you work on that harmonization. >> we are definitely doing that. >> or a paper or loan that has some difficulty, to be able to be moved easily, efficiently, to servicers that will actually do that, reach out to both protect the securitization, but also work with those homeowners. >> can i just make a point? i think you would be happy with the most recent set of things we've been working on in that area to try to encourage loans to servicers, transfer of loans to services who have a history in working well with borrowers and staying out of foreclosure as opposed to going to foreclosure. >> only obligation on your side is simple, efficient, low cost ability to move paper back and

forth when necessary. second one, and this is more just being from the west, and i know you said you're working on it, you're working on sort of the risk pricing model, and you saw it pop up. for those of us in the west, we're very efficient. we're very low cost. the ability to do it sometimes is difficult. some states are mortgage states that put on lots and lots of consumer protections, but have raised the cost. it is only hope only fair that those different cost structures be priced into the product. for those out west, we often feel like in our pricing, if you have national pricing on that risk that we are subsidizing states that have made it much more difficult to move through that foreclosure process. something is there, and it's math. hopefully you'll treat it that way. the thing i'm most interested in and some of i'm going to

give you in writing because i never have time. was it last week did you the stacker deal? >> the most recent one was the first piece that was transferred out which is fascinating to me, because in that sort of model, you're actually creating a securitization where the g.s.e. is ultimately a catastrophic coverage. help me understand how that works, and in some ways how that may help us drive towards g.s.e. reform. >> when we started doing risk transfers, we started by having the g.s.e.'s retain the first loss transferring risk on some subsequent loss and then coming back in with the g.s.e.'s, retaining catastrophic loss.

we are now experimenting and looking at the process of having transferring the first loss back to the private. >> thank you for your patience. >> time is expired. the gentleman yields back. the chair now recognizes the gentleman from michigan for five minutes. >> thank you, mr. chairman. at the risk of redundancy, mel, it's good to have you back. i only got to serve a year with you, but as you can see, in the year you've been gone, i've become the second ranking member on the democratic side of the committee. at least for the moment. before i ask some questions, i would ask to you comment, i'd like to submit for the record some comments from the homeownership preservation foundation regarding strengthening of the u.s. housing finance system through provision of housing counseling services, and we talked about credit score and down payment-related risk mitigation factors.

and as you have stated there are other factors to be considered. we had a panel here some months ago, and i think it may have been after you left, you probably heard similar panels where we had a number of representatives from the mortgage industry talk to us about, in general about mortgage lending, and the risks associated with mortgage lending. we happen to have an individual from an organization that does a lot of affordable housing work, and some of the lenders referenced if they use the same process, which include a heavy emphasis on homeownership counseling that they would have default rates that were lower. could you quickly comment on that particular point, and if you don't mind, i'd like to have these comments entered view into the record. and then i have a couple of other comments. >> i don't think there's any question that somebody who gets good homeownership counseling, either preownership or in some cases post-ownership, it makes them a better borrower. it can't be just any swing, it

has to be good homeownership counseling t. really has an impact because especially first time homeowners have little appreciation for the responsibilities that go with homeownership that are different than being a renter. >> i hope as we move forward on whatever process we engage in that we make sure to consider those factors. i'd like to turn to another somewhat related question, and it has to do with access not just to credit, but access to mortgages, even for creditworthy individuals in markets, such as markets i represent. i represent flint michigan, my hometown, where the average home price is $47,500. for many legitimately -- legitimate borrowers with decent credit, for many banks,

many mortgage lenders mortgages of that size, they say just don't make economic sense. i wonder if there's anything that you are working on or could refer to us in terms of the work of aha that would make sure we still have opportunity for homeownership, because otherwise we're basically con signing those communities to rent. your point about the effective vacant properties on surrounding values is an important one, but it's also, the percentage of homeownership of those occupied properties has a similar effect, and i wonder if you could comment on that particular point. >> we've put in 2015 scorecard, and obligation on the enterprises to work with communities, smaller banks and&state housing finance agencies to try to get to those lower and unserved areas, lower

cost areas and unserved areas. i think we're going to make some progress on that this year. i think the 97% loan product will have some variance on that, although it's not specifically designed for that category. >> i would agree, and this question we listened as you answered questions about questions particularly related to down payment thresholds. i think we could all sort of agree. you don't even have to bother to answer the question, if we decided a 20% down payment standard would be enacted, that we would have a far lower default rate or if you had a million dollars in net value, assets in your own personal portfolio, you might have a lower default rate. the question, is how do we balance these interests so that the maximum number of americans have the opportunity to achieve homeownership, understanding that there are many, many ways to mitigate risk associated

with people who are in a financial condition that does not allow them because they're dealing with others in their life every day to save the kind of money that it takes. because of the rule making process, the membership standards question for federal home loan bank is an area of some concern for me, because in some ways by limiting membership standards, we might actually cut off another source of revenue that can be directed to direct some of those local community-based organizations working on homeownership. >> the gentleman's time is expired. you may respond in writing. the chair now recognizes the gentleman from kentucky for five minutes. >> director watt welcome back to the committee. congratulations on your confirmation. as you know, the consumer financial protection bureau has finalized its ability to repay qualified mortgage rule and the purpose that have rule is to encourage safe and sound

mortgage loans. a recent survey of mortgage lenders showed that about 2/3 of respondents would restrict lending because of, directly because of the qualified mortgage rule as defined by the regulators under dodd-frank, and about 80% of those respondents expected the new regulations to measurably reduce credit availability. obviously given your agency's f aha recent policy moves and changes, you appear to share the concern about credit availability and access to affordable mortgage credit, the changes to guarantee fees of the guidelines allowing to buy loans with ultralow 3% down payments, and all of this appears to conflict with the bureaus, qualified mortgage rule. so my question is is qhha

encouraging a policy of encouraging mortgage lenders to originate non-q.m. loans that the bureau would deem risky? >> no, we're not. we're not without prudent compensating factors to take whatever that increase risk might be into account. >> wouldn't it make sense that a borrower that can only afford 3% down is likely to run into the debt to income ratio limitations imposed by the f.m. rule? >> yes. >> i'm just curious to understand how the american public is to interpret what the

government is doing, sending mixed signals of encouraging more credit availability on the one hand, your policy changes versus what the bureau appears to be doing, which is tightening or restricting access to mortgage credit. >> i think a judgment has been made that because fannie and freddie under conservatorship during the period that they're in conserve forship we could make those judgments without being subject to the qualified mortgage rules for a period. now, i don't know that that will sustain itself forever, but that's where we are at this moment. >> director, i've introduced legislation called the portfolio lending and mortgage act. since i'm going to be re-introducing that legislation, it's got bipartisan interest in it. it's motivated by the same concerns you have about access to mortgage credit for responsible borrowers, and the idea would be to modify the

rule to allow lenders to retain the risk which was a primary motivating policy in the dodd-frank law retain the risk, portfolio those loans to get the same safe harbor that other q.m. loans would get. my question is, wouldn't that be a more sensible approach to dealing with these 3% loans so that the risk is on the shareholders of the bank and not on the taxpayer? >> i think that's a judgment for congress to make. it wouldn't be a judgment for me to make. if you've introduced the legislation that i'm sure congress will evaluate it. >> follow up on some of the questions that congressman duffy was asking about you, the housing trust fund. with roughly 3.3 trillion in assets and 9.5 billion in capital, fannie mae is leveraged at 341-1 and featured a ratio of .29%.

freddie mac has roughly $2 trillion in assets and has a leverage capital ratio of .64%. the typical bank i understand to be leveraged about 10-1. the current amount of leverage at fannie and freddie is far greater than the typical financial institution. i heard your testimony to be earlier that you believe that fannie and freddie are adequately capitalized and you're just following the statute. is that? given those ratios, is that true? >> i don't think i expressed any opinion about the adequacy of the capital. what i said was that we're operating under a preferred stock purchase agreement that has basically taken capital out of the equation during the period of the conservatorship. >> my time is expired. if they are capitalized, i would wonder why they're still in conserve forship. >> chairman duffy, could i trouble you for another

two-minute break? >> no objection. the chair will recess for five minutes again for a second time. >> today the house rules committee meets to consider the rules for dablet on a boil it repeal the healthcare law and provide an alternative. this will be the first time in the republican-controlled 114th congress that the house will vote to repeal the healthcare law. our live coverage of the committee meeting begins at 5:00 p.m. eastern on c-span3. immigration policy comes up in the senate this week as they consider a house-passed homeland secured bill. it includes language blocking president obama's executive order on immigration. majority leader mitch mcconnell announced a vote to advance the measure will be taken tuesday. here's what leadership mcconnell had to say about the bill from the senate floor.

lenge our colleagues on the other side with a simple proposition. do they think presidents of either party should have the power to simply ignore laws that they don't like? well our democratic colleagues -- will our democratic colleagues work with us to defend key democratic ideals like separation of powers and the rule of law? or will they stand tall for the idea that partisan exercises of raw power are good things? the house-passed bill we'll consider would do two things. fund the department of homeland security and rein in executive overreach. that's it. it's simple, and there's no reason for democrats to >> politico reports that if democrats intend to block the homeland security bill when it comes up for that procedural

vote, one democrat who has spoken out against the measure is senate minority whip dick durbin on who friday called for a clean appropriations bill. you can watch the senate vote to advance the homeland security bill tuesday at 2:30 p.m. eastern. as always, we'll have live coverage on c-span2. >> keep track of the republican-led congress and follow its new members through its first session. new congress, best access, on c-span c-span2, c-span radio and c-span.org. >> next, "q&a" dr. frances jensen. and then your calls and comments on "washington journal."

>> this week on "q & a" our guest is dr. frances jensen, neuroscientist, and author of "the teenage brain." she talks about the most recent work going on in the study of the human brain and focuses on the development of adolescence and the reasons behind many of the behaviors parents and others see during these sometimes turbulent years. host: dr. frances jensen, author of "the teenage brain" what impact did the fire in your house have on your life and your teenagers? >> well, it brought us a lot closer together. it was one of those events that you certainly don't plan for and we learned how to sort of function as a team, because it was basically we lost everything in this house fire that happened just as they were turning into teenagers. >> what year was that? >> around 2000-2001. so it was an interesting experience. and for them to also be on the side of people donating things to us.

it was a really unusual experience where we've been on the other side of the gift giving in the past. and we had to work through recreating our physical lives. i think we all learned that stuff doesn't really matter, that it's really all about people. it was an incredible lesson. not that i'd ever recommend it to anybody, but it was an incredible life lesson. >> you were a single mother, but what was the impact on a teenager with that fire and what would be the impact on an adult? what would be the difference? >> yeah, well. stress has a greater impact on teenagers and that is one of many topics we talk about in the book. you know, they are surprisingly vulnerable to things that we might think, oh, they're just resilient. they'll just get past this. it turns out that stress actually can change the way your brain is developing because your brain is still developing in your teen years. it can lead to life-long issues.