When Federal Housing Finance Agency (FHFA) director Mel Watt spoke about his plans for Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) the Brookings Institute earlier this week, some analysts such as Rafferty Capital Market’s Richard Bove felt like the specific details were just the beginning of a much larger change in the administration’s approach to the housing markets. But in a message to investors Barclays takes a measured approach to the speech, focusing on the changes that we know are in the pipeline instead of speculating on what they might foretell.

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Rep and warranty guidelines to be clarified

“Mr. Watt’s remarks were more conciliatory in nature with no major negative surprises and were mostly in-line with what housing industry insiders had expected,” write Barclays analysts Stephen Kim, John Coyle, and Freda Zhuo. “The major takeaways include a streamlining of reps and warranty guidelines, maintenance of the current loan limit, and a forthcoming update on Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) g-fees”

Mortgages settled from July 1, 2014 on will be eligible for rep and warranty relief as long as the loan is current for at least 36 months with no more than two delinquent payments, which will expand the number of eligible loans. Watt also explained that the rules surrounding loan exceptions from rep and warranty relief would be clarified, as certain ambiguities made lenders uncertain about their putback risks and less likely to make loans.

Watt change’s direction on loan limits, g-fees: Fannie Mae, Freddie Mac

Previous FHFA director Edward DeMarco had been considering reducing loan limits from their current level of $417,000 ($625,500 in areas with higher housing costs), but Watt is clearly concerned about taking action that would put even more pressure on the housing markets. It’s notable that the Crapo-Johnson proposal to reform Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), amongst many changes, would have kept those loan levels more or less intact.

“We view today’s comments as effectively eliminating the likelihood of reduced loan limits for the foreseeable future,” write Kim, Coyle, and Zhuo.

In another change in direction, DeMarco had proposed increasing g-fees for high-risk borrowers, but Watt said that the FHFA will formally request input as the proposal is re-evaluating, which sounds like a first step in walking back the idea. Barclays doesn’t think that fee reductions are likely, but the comments sound like Watt will be more accommodative on these issues.