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FRB Releases Housing Market White Paper

On January 4, the Federal Reserve Board released a white paper entitled, "The U.S. Housing Market: Current Conditions and Policy Considerations" that provides a framework on housing policy and tradeoffs. The white paper discusses housing market conditions, proposals aimed at foreclosed properties owned by financial institutions, proposals aimed at homeowners at risk of default or foreclosure, and mortgage servicing practices. The white paper concludes that the challenges faced by the U.S. housing market today reflect, in part, major changes taking place in housing finance, a persistent excess supply of homes on the market, and losses arising from an often costly and inefficient foreclosure process (and from problems in the current servicing model more generally). The paper also suggests that policymakers should find ways to help reconcile the existing size and mix of the housing stock and the current environment for housing finance by adapting the existing housing stock to the prevailing tight mortgage lending conditions by either devising policies that could help facilitate the conversion of foreclosed properties to rental properties, or by supporting a housing finance regime that is less restrictive than today's, while steering clear of the lax underwriting standards that emerged during the last decade. The Missouri Credit Union Association's advocacty team continues to monitor both legislative and regulatory developments in the area of housing finance reform and will continue to work with the CUNA GSE Reform Review Task Force and other Committees on such mortgage and housing policy developments, proposals and strategies going forward.