Barry Habib, one of the most respected figures in the mortgage industry has been on a mad campaign to get through to the Fed regarding it’s unrestrained purchases of Mortgage Backed Securities. Late last week, he and his son, Dan, put out this piece on where the mortgage market is today. If you have not read it, I would highly recommend that you do. You will be smarter for it. Promise.
So, did the Fed listen? Here’s what they bought last week:
3/23/2020 – $30,169,000,000
3/24/2020 – $36,416,000,000
3/25/2020 – $39,876,000,000
3/26/2020 – $35,804,000,000
3/27/2020 – $41,042,000,000
It appears as if they did head the warning that purchases of MBS would exacerbate the situation, as they only purchased $21 Billion today (3/30/2020) instead of the planned $40 Billion. It would better if they stopped buying altogether for a while so that we can clear the volume already in the system. It’s a delicately balanced system and when you go tinkering with one part of it, other parts tend to get a little wonky.
As counter intuitive as it may seem, we need mortgage backed securities to get worse for a while so that the whole system gets better. If not and the Fed keeps buying in an unrestrained manner, we may be looking at mortgage banking bailout to save some of the key players.
Take a look at this video from Barry Habib. He does an amazing job of explaining what’s happened over the last few weeks.
CNBC’s Steve Liesman Discusses the Fed’s Purchases on Mortgage Rates.
Liesman echoes much of what Barry says above in this video.
Can’t I Just Skip My Mortgage Payment If I Fall On Hard Times?
I can’t tell you how many times over the last few days that I’ve seen people in real estate posting that you can skip your mortgage payment due to hardship. Please STOP saying this because it is seriously irresponsible. Take a look at this post below for some basics. Above all, if you or your clients find yourself or themselves in a spot where you can’t make your payment, please, please, please call the number on your mortgage statement and discuss it with them FIRST! You may have options but if you act without facts, you will be doing more damage than good.
