The Washington DC-based Mortgage Bankers Association has released a white paper that discusses how the market for securitized mortgages might function after the Federal Reserve largely leaves the market in 2015. Authored by its Chief Economist, Michael Fratantoni and released on Nov. 20, Who Will Own Mortgage Assets doesn't offer any definite answers but catalogues the market players — banks and credit unions, institutional and foreign investors and real estate investment trusts — that all currently play a role in the market and discusses the barriers and restraints to their taking a larger role.
“We are approaching an important turning point with respect to the mortgage market,” Fratantoni wrotein the paper. “The Federal Reserve will no longer be the dominant purchaser of agency MBS. And unlike prior to the financial crisis, there is no single player waiting in the wings to be the dominant buyer day in and day out going forward. The GSEs are required to continue to shrink their investment portfolios. And banks, foreign investors, asset managers, broker-dealers and mortgage REITs all face significant constraints to increasing their share of the market to pick up the slack.”
Fratantoni estimated that the Federal Reserve will have largely exited the market by sometime in the middle of 2015.
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