WASHINGTON — Credit availability is being stifled in part by a fear that lenders will be forced to buy back loans they sell into the secondary market, according to John Stumpf, the chief executive of Wells Fargo.
Speaking at a National Press Club event on Wednesday, Stumpf discussed a range of issues, including the economic outlook and the current strict regulatory environment.
But he spent a considerable chunk of his remarks focused on why housing has not picked up despite a prolonged period of low interest rates. In addition to citing factors including high student loan debt and a tough job market, Stumpf pointed to credit availability as the main culprit.
He said putbacks by Fannie Mae, Freddie Mac and the Federal Housing Administration, in which lenders are forced to buy back loans after they are determined not to meet those agencies’ standards, are hampering lending.
“There are certain parts of the market where you that can’t get a conforming mortgage because we know what happens” when loans go into default, Stumpf said.