On May 13, FHFA Director Mel Watt presented a new strategic plan for the FHFA under his direction, which will focus on fulfilling the FHFA’s obligations under current law, and will shift away from efforts to position the agency—and Fannie Mae and Freddie Mac—for a potential future role in a reformed secondary market. Mr. Watt discussed the representation and warranty framework changes announced by Fannie Mae and Freddie Mac (see Byte below), and also announced that (i) for loans with DTI above 43%, the FHFA will continue to permit the use of compensating factors in each company’s underwriting standards; (ii) the FHFA will not alter loan limits, as proposed under prior leadership; (iii) the FHFA will not expand HARP but will “retarget” the program to capture already qualified borrowers; and (iv) the FHFA will launch a new modification pilot program. Mr. Watt’s remarks did not cover principal reduction or servicing rights transfers, but during a question and answer session he indicated both issues are on the FHFA’s agenda for further consideration. Further, Mr. Watt explained that under his leadership the FHFA will not seek to affirmatively reduce Fannie Mae’s and Freddie Mac’s footprint, though the FHFA will continue to work to increase the role of private capital, and soon will issue a request for comment on potential guarantee fee changes. The FHFA also will focus on private mortgage insurance counterparties, including by strengthening master policies and eligibility standards for private mortgage insurers. Finally, the FHFA will continue to build a common single-family securitization platform and transition Fannie Mae and Freddie Mac to a single common security, but the FHFA is taking steps to “de-risk” the securitization platform project, including by emphasizing that the agency’s top objective for the common platform is to ensure that it works for the benefit of Fannie Mae and Freddie Mac and their current securitization operations.