An expanded role for government mortgage finance agencies could help heal U.S. housing markets, where lingering pain is undercutting economic recovery, the Federal Reserve said on Wednesday.
In a white paper to leading members of Congress, the Fed suggested fixes aimed at keeping the lid on the vast inventory of unsold homes, making it easier for borrowers to get credit, and containing an onslaught of foreclosures.
The Fed’s comments come as problems in the US housing market remain a major impediment to economic recovery. House prices have fallen an average of about 33 percent from their 2006 peak, resulting in about $7 trillion in household wealth losses and an associated ratcheting down of aggregate consumption.
Fannie Mae and Freddie Mac are expected to manage this onslaught of foreclosed properties, with new additions coming in.
Demand for existing homes, however, is slowly increasing. Data released in December showed a 7.4 percent monthly jump in contracts to buy them.
Tags: real estate USA