Simply, the Fed should consider purchasing more mortgage backed securities.
The effect can only help the economy and not effect inflation.
Here’s the quick down and dirty by going backwards:
Fed buys Fannie Mae paper
Fannie Mae buys loans from XYZ Lender
Lender buys loan from Broker
Funds given by buyer to seller
Seller pays off existing mortgage and walks away with very little money from sale.
So, seller is released from debt they could not pay, jobs are being created by the broker, lender and Fannie Mae employees getting paid.
New buyer gets an affordable payment on a home that now pays for paint, furniture, etc.
How about a refi so say?
Simply, the borrower gets a cheaper payment or cash out to spend. Â That stimulates and economy.
And the Fed gets the principal back AND interest. Â It’s not a bailout and it does not push inflation.
And until the institutions that become satisfied that they are buying what is promised, the Fed must be the  buyers of mortgages to keep rates low and flowing.
