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Fed Housing Director: Some Signs of Stability in Market

Outgoing Federal Housing Finance Agency director James Lockhart told CNBC Friday that there are some signs of stability in the housing market.

"Things like housing prices are starting to stabilize," says Lockhart. "Certainly serious delinquencies and foreclosure will continue to rise for a while, but if we can get this home affordable program (HARP) working more effectively we’ll see even more stabilization."

Lockhart is stepping down from his post at the end of August and says his departure is overdue. He was appointed more than three years ago by former President George W. Bush, and stayed under President Barack Obama to help Fannie Maeand Freddie Macstabilize after being seized by the government last fall.

"I told them since they have arrived that I was going to leave,” he said. “I have been actually telling them for the last three months that I wanted to leave but they haven’t gotten a replacement yet."

Edward DeMarco, chief operating officer of the Federal Housing Finance Agency has been picked as acting director but the Obama administration has not chosen a permanent replacement.

Still working in his role overseeing government interventions in private financial markets, such as Fannie and Freddie, Lockhart says these two institutions’ new businesses should be profitable in the future.

"The key problem they had was that they were able to leverage themselves 100 to one," Lockhart said. "What has to change is were going to have to rethink the whole secondary mortgage market in particular going forward. Fannie and Freddie should be able to play an extremely important part but it has to be done with a much stronger balance sheet, much better mortgages being made and higher underwriting standards."

Yet, improvement will still take some more time says Lockhart.

"Housing prices and unemployment are the two keys [for a housing recovery]," said Lockhart. We’re bumping along the bottom here," Lockhart said. "It’s going to take a while. We may be bumping along the bottom for the next six to twelve months, but, we’re getting there."
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