ICBA’s joint proposal to reduce mortgage rates by an estimated 100 to 150 basis points is making news.
Report: HousingWire and Punchbowl News covered the plan from ICBA, the Community Home Lenders of America, and the National Association of REALTORS to reduce historically high long-term mortgage rates relative to long-term Treasury bonds to bolster demand for mortgage-backed securities.
Plan Details: In a joint letter to the White House and Treasury Department last week, the groups urged:
The Federal Reserve to maintain its stock of mortgage-backed securities and to suspend further runoff until liquidity and the spread between the 30-year fixed-rate mortgage and 10-year Treasury stabilizes.
The Treasury Department and Federal Housing Finance Agency to amend the Fannie Mae and Freddie Mac Preferred Stock Purchase Agreements to enable the enterprises to temporarily purchase their own and Ginnie Mae’s mortgage-backed securities.
Background: High mortgage rates and a housing shortage have created historically high affordability challenges, saddled banks with low-coupon mortgage-backed securities, and created disincentives for servicers to take loss-mitigation actions. Purchasing and holding 30-year fixed-rate mortgages would help address these issues by easing the strain on liquidity in the market for MBS, the groups said.
