A new white paper from the Mortgage Bankers Association looks at what the future holds for the real estate finance industry secondary market now that the Federal Reserve has put a full stop on its quantitative easing program, wherein it pumped trillions of dollars into mortgage backed securities.

The full white paper, entitled “Who Will Own Mortgage Assets,” can be downloaded and read here.

“We are approaching an important turning point with respect to the mortgage market.  The Federal Reserve will soon no longer be the dominant purchaser of agency mortgage backed securities,” said Mike Fratantoni, MBA’s chief economist.  “And unlike the case prior to the financial crisis, there is no single player waiting in the wings to be the dominant buyer day in and day out going forward.”

Private investors, he said, face a slew of challenges when it comes to increasing their share of the MBS market. 

“Identifying the barriers to private capital increasing its ownership of mortgage assets, and moving to reduce those barriers where feasible, should be part of the ongoing conversation and debate,” Fratantoni said.

The MBA’s paper looks at the need to increase private capital within the system, the minimization of systematic risk, and ensuring proper liquidity in the market to reduce unnecessary volatility. 

Also discussed are the roles of banks and other depositories, asset managers and broker-dealers, foreign investors, and mortgage real estate investment trusts, or “REITs.”