This is completely opposite of what I posted a few minutes ago. Where the Fed wants to lower interest and mortgage rates.
Additionally, keeping rates low may keep housing more affordable, but it's clearly to the detriment to the private-label secondary market.
Consistently maintaining low costs to the borrower is not encouraging home sales, as an article in USA Today notes. But keeping mortgage rates low does reduce any chance of profitability in the RMBS market.
Further, Dodd-Frank prohibits pre-payment penalties. However, these penalties serve as a risk hedge in private label RMBS. Pinto also suggested that these fees should be reinstated to help ensure the 30-year mortgages take 30-years to amortize
Basically, he saying that mortgages rate are below ability to private industry to make money. by reselling the loans. In addition, Federal government through FHA and GSE are the mortgage the market.
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