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Dirt-Cheap U.S. Mortgages Thwarted by $5 Billion in Margin Calls

  • Rescue of housing market in March accidentally burned lenders
  • Variety of pressures keeping rates from going even lower
Housing Construction As New-Home Sales Held Up Prior To Disruptions
Photographer: Luke Sharrett/Bloomberg

The Federal Reserve’s emergency rescue of the U.S. mortgage market should have set off celebration among lenders trying to keep up with demand from borrowers. Instead, executives at Quicken Loans got a hefty margin call.

That was just a fraction of the pain the Fed unintentionally inflicted on lenders in mid-March when it announced plans to buy a massive amount of mortgage securities. The move, meant to steady the market, caught many lenders by surprise and tipped their routine hedges deep into the red.