The Real Conversation About Portable Mortgages

The recent article titled “Why Portable Mortgages Won’t Work in the U.S.” has sparked conversation, but its headline and tone risk shutting down productive dialogue. While written by a respected economist, its conclusions overlook the current reality of the housing market and dismiss an innovative solution addressing one of the country’s most urgent issues.

You can read Joe Tirone’s original LinkedIn post here to see his full message to the public.

Outdated Data and a Changing Market

Much of the critique relies on 2021 data, which does not reflect the significant market shifts of the past few years. Today’s lock in effect, where homeowners with very low mortgage rates are unable or unwilling to move, is contributing to the lowest level of residential transactions in three decades.
Portable mortgages directly address this freeze by enabling mobility and unlocking inventory. Their benefits extend well beyond borrowers with low rates.

A Misunderstood Advantage

Some critics argue that allowing homeowners with three percent mortgage rates to transfer their rates creates an unfair advantage over buyers taking out mortgages at current rates. This argument does not consider a major factor. According to Realtor dot com, about one third of buyers pay cash.
Portable mortgages simply allow rate locked homeowners, many of whom are middle class, to compete more effectively with cash buyers.

Many of these homeowners would be selling in lower price ranges, which are the price points most needed by first time buyers. Their budgets naturally limit price inflation. These buyers are cautious, value driven, and not aggressive bidders.

Mortgage Backed Securities Concerns Are Overstated

Some suggest that portability would disrupt prepayment models in the mortgage backed securities market. However, analysis from David Jiawei Zhang at MSCI shows a different reality.
Short term prepayment behavior may shift, but long term patterns remain stable because these homeowners would likely not sell without portability. Extension risk stays largely the same.
Comparisons with the Canadian mortgage system are not appropriate, since the portable mortgage proposals in the United States do not apply to new loan originations.

A Solution Years in the Making

For nearly two years, our team has been developing a fully structured portable mortgage framework. We have presented the model to leaders throughout the housing and financial sectors, refining it with their guidance.

In July, we submitted our proposal to FHFA Director Bill Pulte. Last week, Director Pulte publicly acknowledged that he is reviewing the idea, which has now sparked a wave of national attention.

While critiques continue to appear, many are premature or based on outdated information. Our proposal has been thoroughly evaluated by experts and is ready for responsible implementation.

We hope that major publications such as The New York Times or The Wall Street Journal will soon provide a detailed examination of this concept. Both have shown interest and could help move this discussion forward in a meaningful way.