Mortgage bankers warned the U.S. housing market risks a 'large-scale disruption,' due to efforts by the Fed that were meant to help it.
The Mortgage Bankers Association warned that the housing market could face a " large-scale disruption," due to actions by the Fed that were meant to help the mortgage market.
Federal Reserve Chair Jerome Powell holds a news conference following the Federal Open Market Committee meeting in Washington, December 11, 2019.The Mortgage Bankers Association in a dire letter to regulators Sunday warned that the U.S. housing market is "in danger of large-scale disruption," due to efforts by theAt issue are the Fed's unprecedented $183 billion of purchases last week of mortgage-backed securities. The purchases were meant to drive down rates, and they did.
Hardest hit are independent mortgage bankers who wrote about 55% of the $2.1 trillion mortgages created last year. In the week of March 16, the Fed bought $68 billion of mortgages. But the market still saw massive selling, prompting the Fed to come in with an additional $183 billion of purchases last week. The combined quarter-trillion-dollar in mortgage purchases by the Fed over two weeks was $84 billion more than the Fed had bought over any four-week period during the financial crisis in 2009.
But Barry Habib, founder of MBS Highway, a leading industry advisor who was among the first to publicly sound the alarm bell last week, said the Fed needs to go further than just modulate.
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