We hear on almost a weekly basis that mortgage interest rates in the US are at all-time lows. The annual percentage rates in mortgage advertisements seem near an historic nadir. The Fed has even begun to purchase long-dated mortgage backed securities (MBS) in an effort to push rates even lower and, hopefully, spur more refinancing activity.
Alan Boyce, Glenn Hubbard, and Chris Mayer (“BHM”) have published an important paper, “Streamlined Refinancings for up to 30 Million Borrowers,” which makes the case for refinancing all loans – trillions of dollars in face amount — now covered by the housing GSEs, Fannie Mae and Freddie Mac. This proposal breaks-down the evil cartel of banks and GSEs currently blocking more than 30 million American families from refinancing their homes and thus stalling economic recovery.