Bloomberg: The Real Lender on Your Mortgage Could Be the Federal Reserve

Bloomberg, July 1, 2021, The Real Lender on Your Mortgage Could Be the Federal Reserve

Why, again, is the Federal Reserve adding $40 billion a month to its holdings of mortgage-backed securities when the mortgage market doesn’t seem to need any federal assistance?

After all, the national average for a 30-year fixed-rate mortgage loan is 3.02%, according to the latest survey by mortgage buyer Freddie Mac Corp. That’s up only a bit from its historic[MAKE THIS ALL-TIME? HISTORIC IS A BIT VAGUE I THINK (AND REPS IN A SECOND)] low of less than 2.7% in January and February. Cheap loans are fueling a historic[KEEP THIS ONE!] rise in home prices that’s making homeowners rich on paper but crushing would-be first-time buyers: The S&P CoreLogic Case-Shiller index of U.S. property values climbed 14.6% in April from a year ago, the biggest gain in data going back to 1988.

When you get a loan from a bank or a nonbank lender, there’s a good chance it will be packaged into a mortgage-backed security and sold to investors, and there’s a good chance the ultimate holder will be the Federal Reserve. Which means the Fed could be financing your mortgage. In the week ended June 23, the Federal Reserve owned $2.35 trillion in MBS, according to the Fed’s H.4.1 statistical release. The Securities Industry and Financial Markets Association (Sifma) reports there were $8.44 trillion in the securities guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae at the end of 2020, meaning the Fed owns more than a quarter of the MBS market.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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