The Community Home Lenders of America (CHLA) is calling on federal housing and finance leaders to ramp up intervention in mortgage capital markets to ease borrowing costs for prospective homebuyers.

In a letter addressed to U.S. Treasury Secretary Scott Bessent and Federal Housing Finance Agency (FHFA) Director Bill Pulte on Wednesday, the CHLA said targeted purchases of agency mortgage-backed securities (MBS) could make a “material improvement in today’s mortgage markets.”

The trade group, which represents mostly small and midsize mortgage lenders, has repeatedly advocated for more active bond buying by Fannie Mae and Freddie Mac as a way to subsidize mortgage rates after the Federal Reserve exited the agency MBS market as a major buyer in 2022.

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That shift has seen MBS demand fall and spreads widen in the secondary mortgage market.

To varying degrees, Fannie and Freddie have boosted their MBS purchases this year after President Donald Trump authorized the government-sponsored enterprises (GSEs) to buy up to $200 billion in agency issuance in January. However, the firms’ latest disclosures indicate neither has approached their purchasing capacity.

Fannie and Freddie are limited to holding up to $225 billion apiece of MBS. As of July, they only held a combined $155.39 billion, down from $161.68 billion at the end of June and $162.38 billion at the end of May.

Pulte signals more MBS buys coming

Following press reports highlighting the decline in MBS holdings, Pulte announced on social media on Sept. 18 that Fannie and Freddie were “beginning to buy even more, large quantities.”

The announcement from Pulte, who also serves as board chair of Fannie Mae and Freddie Mac, elicited applause from the CHLA in Wednesday’s letter. But the trade group took issue with the sluggish pace of MBS purchases since the president’s directive at the start of the year.

The CHLA assesses that MBS purchases by Fannie have risen from $71.5 billion at the end of 2025 to $100 billion by the end of July. Freddie’s purchases, however, increased from $44.6 billion at the end of 2025 to just $55.6 billion by the end of February — with no purchases since.

“We also note that neither GSE is approaching its overall retained portfolio $225 billion limit, as Freddie Mac is at $137.2 billion and Fannie Mae is at $173.35 billion,” said the CHLA. “Both GSEs can do more here.”

Fannie and Freddie purchasing the MBS they issue is designed to narrow the so-called “30/10 spread” between 30-year mortgage rates and 10-year Treasury yields. It remains a controversial move among industry participants, who caution that such intervention can increase spread volatility over time.

Other secondary market experts have told Scotsman Guide that the relatively small size of $200 billion in purchases would do little to offset structural changes driving mortgage spreads wider and mortgage rates higher — limiting any short-term gains in affordability to offset long-term trade-offs around increased volatility.

Where Ginnie Mae fits in

Fannie and Freddie’s initial wave of MBS purchases did narrow spreads in the immediate aftermath of the $200 billion announcement in January, helping to spur a rebound in refinances during the first quarter. After dipping below 190 basis points earlier this year, the 30/10 spread has widened back to around 220 basis points, the CHLA said, which is around levels observed last summer.

But the CHLA insists that ramped-up purchases by Fannie and Freddie could produce 10 to 12 basis points of spread tightening, which would constitute “material improvement in today’s mortgage markets.” Average 30-year rates jumped last week to their highest levels in more than two years, according to Mortgage Bankers Association data.

As it did a year ago, the CHLA further urged Pulte and Bessent to execute Fannie and Freddie acquisitions of Ginnie Mae MBS, which are government-guaranteed securities comprised of mortgages insured by the Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture.

Many of those government-insured loan programs cater to prospective low- and moderate-income and first-time homebuyers disproportionately feeling the burden of rising housing costs.

“Our view is that the signaling alone here would bring rates down for these families by roughly 20 basis points, which would make a material difference for them,” the CHLA wrote in its letter, adding that Fannie and Freddie “are authorized to buy Ginnie Mae MBS, and they should do so.”