WASHINGTON — When it comes to taking out a mortgage, two factors can stand in the way: the price of the mortgage – as in the down payment and the interest rate – and the borrower’s credit profile.

On Monday, the head of the agency that oversees the mortgage giants Fannie Mae and Freddie Mac outlined in broad terms how he plans to make it easier for borrowers on both fronts. Mel Watt, director of the Federal Housing Finance Agency, did not give the exact timing on the initiatives. But most of them are designed to encourage the industry to extend mortgages to a broader swath of borrowers.

Here’s what Watt said about his plans in a speech at the Mortgage Bankers Association’s annual convention in Las Vegas:

 Down payments: Saving enough money for a down payment is often cited as the toughest hurdle for first-time buyers in particular. Watt said Fannie and Freddie are working to develop “sensible and responsible” guidelines that will allow them to buy mortgages with down payments as low as 3 percent, instead of the 5 percent minimum that both institutions currently require.

This change would apply to a “targeted segment of creditworthy borrowers”Watt said. More details are to come in the weeks ahead, Watt added.

Credit scores: Most housing advocates agree that a bigger bang for the buck would come from having lenders lower the unusually high credit scores that they’re now demanding from borrowers.

Today, the average credit score on a loan backed by Fannie and Freddie is close to 745, vs. about 710 in the early 2000s, according to Moody’s Analytics. And lenders say they won’t ease up until the government clarifies rules that dictate when Fannie and Freddie can take action against them.

 Interest rates: Watt touched on this subject only in passing, but several initiatives under consideration at his agency have the potential to affect interest rates.

One of them involves the fees paid by lenders to Fannie and Freddie. The guarantee fees were due to rise again. But Watt delayed that move, saying he needed to take a closer look.


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