Federal Reserve Board economists have released a long-anticipated study that says the giant mortgage portfolios retained by Fannie Mae and Freddie Mac "clearly benefit" shareholders but have a "statistically negligible" effect on the mortgage rates homebuyers pay.The study attempts to deflate the claims by the two government-sponsored enterprises that their $1.57 trillion investment in mortgage loans and mortgage-backed securities helps to stabilize the mortgage market and lower mortgage rates. "A sudden increase in GSE portfolio purchases or MBS issuance has essentially no long- or short-term effects on mortgage spreads," the Fed study says. The GSEs like to boast that their ability to step up their MBS purchases during the 1998 financial crisis stabilized the prime market, while a flight to safety by investors crippled the subprime market. But the Fed researchers contend that the GSEs did not play a "significant role in managing mortgage risks" during the 1998 crisis. "We fundamentally disagree" with the study, a Freddie Mac spokeswoman said.
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The pending end of the program comes as over half of U.S. states have already ceased accepting new applicants for federal aid aimed to help struggling households with mortgage payments.
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But the 30-year fixed rate mortgage is still near 7%, and that remains the overhang on the housing market, Freddie Mac said.
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Mortgage payments rose 10% year-over-year to an all-time high for March, Redfin said.
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In an interview, Candor Technology's Sara Knochel recounts how she applies her childhood interest in languages and numbers to crucial home lending issues.
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Harmonizing standards for liquidity coverage ratios and discount window pledges could prevent the type of strains that led to last year's bank failures, according to a new paper whose authors include former Federal Reserve Govs. Dan Tarullo and Jeremy Stein.
March 27 -
The report seeks to help banks "disrupt rapidly evolving AI-driven fraud," according to Treasury's Nellie Liang. The report found banks have difficulties accounting for AI risks.
March 27