ICBA and the Community Home Lenders of America called on the Treasury Department and Federal Housing Finance Agency should permit Fannie Mae and Freddie Mac to use their portfolios to help reduce the historically wide spread between 30-year mortgage rates and 10-year treasuries (30/10 spread). ICBA said this action could reduce mortgage rates by 30 basis points or more.
Details: In a letter to Treasury Secretary Scott Bessent and FHFA Director William Pulte, ICBA and CHLA noted that housing accounts for nearly 20% of GDP—and affects all homeowners, and renters, especially those in underserved and rural communities. The groups added that action is critical to address homeownership affordability and lending challenges.
Recommendations: ICBA and CHLA said:
Treasury and the FHFA should amend the Preferred Stock Purchase Agreements to enable Fannie Mae and Freddie Mac the limited authority to purchase their own mortgage-backed securities or Ginnie Mae MBS at a higher ceiling than currently exists.
The agencies should give each of the government-sponsored enterprises the ability to purchase up to $300 billion in MBS for when the 30/10 spread is above 170 basis points.
In no way would this authority replicate the unlimited authority the GSEs exercised in the past regarding their retained portfolios.