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Drudge Retort: The Other Side of the News
Tuesday, March 31, 2020

The Federal Reserve unloaded its bazooka of stimulus all over the markets in the last two weeks. But there's some major collateral damage. By flooding the markets with money, they may have accidentally trigged a housing market crash. The Mortgage Bankers Association (MBA) warned of large scale disruption' to the housing market and accused the Fed of using a sledgehammer.' By flooding the market with money, the Fed forced down rates. Problem is, that just blew up the hedge. Mortgage bankers are now getting margin calls and need to pay tens of millions of dollars to meet them. Even well capitalised lenders are on the brink of going under because of it. In a letter to regulators, the MBA wrote: Margin calls on mortgage lenders reached staggering and unprecedented levels by the end of the week.

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It sounds more like the product of financial irresponsibility than anything else. Unless this is somehow going to prompt homeowners to stop paying their mortgage payments like they did in 2008. Of course the reason they were doing so then was because they had bought houses at more than what they were ultimately worth. I'm sure the value of some properties has been adversely affected by COVID, but it seems like it's a very different scenario.

#1 | Posted by madbomber at 2020-03-31 02:02 PM | Reply

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