Federal Reserve governor Elizabeth Duke is calling for a more aggressive approach to rescuing the housing market by allowing more homeowners to refinance and by converting some foreclosures into rental housing, the Wall Street Journal reported.
“Clearly the market is not functioning as it should,” she said in a speech Thursday in Washington.
Duke advised that policy makers should improve upon an already-existing White House initiative designed to facilitate more refinancing of loans guaranteed by government-supported mortgage firms Fannie Mae and Freddie Mac, the Journal said. Allowing more homeowners to take advantage of low interest rates would bolster the weak U.S. economic recovery, she said.
The Obama administration is working on similar proposals, but they need either the support of Congress or the Federal Housing Finance Agency.
Duke dismissed the concerns of bondholders worried about losing billions through refinancing; “When I bought mortgage securities…I always knew they were subject to refinancing,” she said. [WSJ]