How one MBS investor thinks supply and demand will get back in sync

The shrinking supply of affordable homes sought by a growing number of households has been further complicated by federal officials' renewed interest in boosting rates and secondary-market volatility. This has made things tougher for the mortgage industry, which has had to get creative to provide emerging would-be homeowners with affordable financing homes since officials began raising rates, creating multiple challenges. These include, most recently, Silicon Valley Bank's collapse. Dynex Capital CEO Byron Boston has seen a lot of market gyrations and has some thoughts on how this might ultimately be resolved. It won't be an easy process as it'll involve going through the housing correction that monetary policy officials have said they're looking for in their fight against inflation. But it could eventually return the balance of supply and demand in the market back on more of an even keel. Boston shared his views on some of the complexities involved in the current balance of supply and demand in housing, mortgage and securitization markets.

READ MORE: How one MBS investor thinks supply and demand will get back in sync

How far the Fed's facility is likely to go in stopping bank MBS woes

The effectiveness of the borrowing facility now available to address the mortgage-backed securities risk that contributed to Silicon Valley Bank's failure remains to be seen, as it has been tapped for at least $12 billion but institutions are leaning more heavily on other funding sources. But experts are hopeful about its usage. The Federal Reserve's Bank Term Funding Program (BTFP) targets the central concern, which is that other banks also are likely to have MBS underwater compared to their original value because those bonds were issued prior to a run-up in rates and generate far less than more recent vintages. If a need for funds arises, rather than selling them and recording a loss based on the change in value, institutions can borrow against the securities at par, or their at-issuance value, instead.

Banking group aims for standardized mortgage licensing requirements

A banking regulatory group is taking steps toward "modernizing" the National Multistate Licensing System, moving toward greater mortgage-industry standardization. The Conference of State Bank Supervisors issued a call for comment on the new Mortgage Business-Specific Requirements proposal, which would set similar regulations around reporting expected from home lending businesses, with the aim for greater operational efficiency across state lines.  "Adopting a standardized approach for mortgage industry licensing will help increase uniformity within the state system," said Vickie Peck, CSBS executive vice president of products and solutions, in a press release.

HUD rolling back Trump-era changes to fair lending rule

The Department of Housing and Urban Development has confirmed its proposed reversal of a 2020 change to a rule governing Fair Housing Act claims. A new rule set to go into effect 30 days after publication in the Federal Register reverses the one the Trump administration put into place related to so-called disparate impact claims. The 2020 rule made it tougher to allege lending discrimination. Its rollback officially brings back the 2013 discriminatory effects rule, which called for a three-part test for claims of discrimination. The 2020 rule would have imposed a five-part test, and would have required plaintiffs to not just show the effects of discrimination were evident but that it had an intentional cause. Given the rollback, plaintiffs no longer need to prove intent.

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