"I continue to think that they want to have this tool going into the midterms, Boltansky said. Those are in November, by the way, so there's going to be enormous pressure to see an increase in additional purchases, in that amount of additional purchases, which can be done if they change the preferred stock purchase agreement. So, I spend a lot of time figuring out what they can do administratively that won't be stopped by the courts or Congress."
"Unequivocally, the Fed chair is the most important person in that silo of financial services, Boltansky said. I think that there will be a meaningful impact there over time. I think the one cautionary point that I've tried to make internally and to others is it takes time to turn around a big institution like the Fed. It takes time to build consensus. The last vote was 10 to two to keep rates where they are. It takes time to change that consensus."
The administration directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities to replace Federal Reserve buying as the Fed allows securities to roll off its balance sheet. The GSEs' authority to buy additional MBS could expire by late summer unless the preferred stock purchase agreement is changed. There will be substantial pressure to preserve or expand this purchasing tool heading into the November midterm elections. Administrative options are being evaluated to avoid legal or congressional obstruction. Mortgage rates remain a central factor in housing affordability. A new Federal Reserve chair could influence rate policy over time, but institutional change and consensus-building will be gradual.
Read at www.housingwire.com
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