The National Association of REALTORS® submitted a letter to the Department of Housing and Urban Development (HUD) and Federal Housing Administration (FHA), urging them to consider policy actions that would immediately unlock a portion of the inventory for buyers with FHA-insured loans. Specifically, the letter asks FHA to consider revisions to the 90-day anti-flipping rule, condominium requirements, and policies for assumable mortgages.
The Washington Report
October 16, 2023
In This Issue
FHA Programs (Federal Housing Administration)
NAR Submits Letter to FHA on Policy Changes
Financial Regulatory Reform
NAR and Partners Urge Fed to Address Long-term Issues in Mortgage Market
NAR and Partners Urge Fed to Stabilize MBS Markets
FHA Programs (Federal Housing Administration)
NAR Submits Letter to FHA on Policy Changes
Jeremy Green, jgreen@nar.realtor, 312-329-8404
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NAR and Partners Urge Fed to Address Long-term Issues in Mortgage Market
NAR joined CHLA and ICBA in urging the NEC and Treasury along with the Fed and FHFA to address short-term issues that have led to unnecessarily high rates. NAR also urged action to support long-term liquidity in MBS market. This effort is the second this week to address the sharp increase in mortgage rates.
The gap between the 30-year fixed rate mortgage and 10-year Treasury is normally about 1.5%. Currently it is now closer to 3%. This 1.5% extra gap reflects inefficiencies in the market, but in particular the Fed's attempt to reduce its holding of MBS when there are few/no buyers to replace it. This decline demand causes rates to go up relative to Treasuries.
Simultaneously several factors have reduced demand for MBS that could be a long-term issue. Under GSE reform, the GSEs' portfolios are limited to minimal sizes. Thus, a second major source of demand is gone. Compounding this is that banks tend not to want to buy mortgages or MBS in rising rate environments and that some are actually selling them due to financial strain (e.g. Silicon Valley Bank). All this has resulted in drain on demand is pressing up on mortgage rates relative to Treasuries.
Ken Fears, kfears@nar.realtor, 202-383-1066
Matt Emery, MEmery@nar.realtor, 202-383-1212
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NAR and Partners Urge Fed to Stabilize MBS Markets
NAR and industry partners wrote to the Federal Reserve, urging it to take actions to help stabilize the market for mortgage backed securities (MBS). Liquidity issues in that market has resulted in a historically wide spread between the 30-year fixed rate mortgage and the 10-year Treasury. This spread in turn has caused mortgage rates to rise more than they should have even with the Fed raising short-term rates.
NAR worked with the Mortgage Bankers and National Association of Home Builders to urge the Fed to provide more stability to the market through better messaging and clear guidance that it will not take destabilizing action such as selling its holding of MBS. The coalition believes that these efforts to ease the upward pressure on long-term rates.
Ken Fears, kfears@nar.realtor, 202-383-1066
Matt Emery, MEmery@nar.realtor, 202-383-1212
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