Housing giants Fannie Mae and Freddie Mac could do an about-facein a renewed effort to nurture the U.S. housing market and betterserve consumers seeking mortgage loans. But this time the moveappears to offer greater benefits to lenders and borrowers than itdoes to Fannie's and Freddie's shareholders and the mortgagegiants' bottom lines.

Mel Watt, the new director of the Federal Housing FinanceAgency, which oversees Fannie and Freddie, outlined on May 13 athree-part strategy designed to make more credit available toborrowers.

Watt's approach, offered during his first public appearancesince taking office in January, reversed the agencies' previousmandates to reduce their roles in the mortgagemarket.

Speaking at The Brookings Institution Forum on the Future ofFannie Mae and Freddie Mac, Watt addressed the FHFA's twinobligations of preserving Fannie's and Freddie's assets whileworking to “ensure a liquid and efficient national housingmarket.”

When it comes to homeownership, consumers desire financingoptions that are flexible and create financial stability.

Watt, a former North Carolina congressman, also cited the needfor Fannie and Freddie to focus on needs of the present, includingtheir eventual emergence from government conservatorship, andelected not to address housing finance reform legislation.

FHFA's first strategy, Watt said, is to maintain foreclosureprevention activities and credit availability for new andrefinanced mortgages to “foster liquid, efficient, competitive andresilient national housing finance markets.”

The second strategy would involve efforts to reduce taxpayerrisk by scaling back mortgage portfolios for both Fannie andFreddie, and increase the role of private capital in the mortgagemarket, Watt said. The 2014 plan called for $30 billion in risktransfers, an amount that would triple to $90 billion under Watt'snew strategy.

The third strategy seeks to build a new single-familysecuritization infrastructure for use by Fannie and Freddie andother participants in the secondary markets. This would involve acommon securitization platform and moving Fannie and Freddie to asingle common security as a means to improve liquidity and leveragecurrent systems and resources.

Watt said, “The FHFA will proceed with these steps in atransparent way that incorporates the feedback of the public andstakeholder groups whenever possible.”

Watt's speech came at what could be a critical time. Reformmeasures for the two enterprises seem to have stalled in Congress, while naysayers have said they worry looser standardscould lead the $14.4 trillion mortgage market into another housingbubble-and-burst cycle.