Federal Reserve rate policies are holding back a recovery in the private-label market for home loans and residential mortgage-backed securities, Christopher Whalen of Institutional Risk Analytics said Thursday.

Whalen released a report titled, "The Real Role of Banks in Residential Mortgage Finance" while in attendance at HousingWire's 2012 REthink Symposium in Palm Beach, Fla.

Whalen stipulated that "price, not legal issues, is the impediment to reviving PLS market."

A revival in private-label RMBS has been a hot topic for the past few years, given the level of interest government officials expressed in 2011 for a mortgage finance system that is driven by the private sector.

Whalen expects weakness to remain in the housing sector with consumer credit and job creation lacking. These indicators suggest continued deflation, Whalen said. 

He added that the central banks, including the Fed, are moving to a more "neutral posture" in terms of accommodative monetary policy, but despite that "the deleveraging process continues in the U.S. banking sector."