bureau of economic research ( nber ) : march 2001 – november 2001, december 2007 – june 2009, and february 2020 – april 2020. source : federal reserve bank of st. louis ( 2023 ), “ personal consumption expenditures : chain - type price index and personal consumption expenditures excluding food and energy ( chain - type price index ), ” fred economic data ( accessed october 27, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 1b1ts u. s. bureau of economic analysis. 7. personal consumption expenditures core inflation note : the shaded bars indicate periods of business recession as defined by the national bureau of economic research ( nber ) : march 2001 – november 2001, december 2007 – june 2009, and february 2020 – april 2020. source : federal reserve bank of st. louis ( 2023 ), “ personal consumption expenditures : goods ( chaintype price index ), services ( chain - type price index ), and excluding food and energy ( chain - type price index ), ” fred economic data ( accessed october 27, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 1b1tb ; u. s. bureau of economic analysis. 8. federal funds target range source : federal reserve bank of st. louis ( 2023 ), “ federal funds target range - upper limit and lower limit, ” fred economic data ( accessed november 02, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 187to ; board of governors of the federal reserve system. 9. 10 - year treasury yield monday, july 3 3. 86 % wednesday, november 1 4. 77 % note : the shaded bars indicate periods of business recession as defined by the national bureau of economic research ( nber ) : march 2001 – november 2001, december 2007 – june 2009, and february 2020 – april 2020. source : federal reserve bank of st. louis ( 2023 ), “ market yield on u. s. treasury securities at 10 - year constant maturity, quoted on an investment basis, ” fred economic data ( accessed october 27, 2023 ), https : / / fred. stlouisfed. org / graph /? g = 1aj76 ; u. s. board of governors of the federal reserve system. 10. treasury yield spread ( 10 year to 2 year ) note : the shaded bars indicate

when managing the risks to the government. 4. protecting the taxpayer any government - insured mortgage offered under a refinancing program needs to be prudently underwritten, regardless of whether a principal write - down is part of the deal. first and foremost, this means establishing a meaningful amount of homeowner equity. second, it means using sound underwriting criteria to ensure that borrowers are reasonably likely to be able to repay the government - insured loan on a sustained basis. third, it means allowing the fha to engage in sensible risk - based pricing of its mortgage insurance products, including substantial flexibility in setting its initial premium and annual premiums. 5. negotiating junior liens from one - third to one - half of all subprime mortgages pertain to properties that also have junior liens. when held by an entity other than the first lien holder, these junior liens present a variety of serious obstacles to a successful refinancing, especially one involving a principal write - down. typically, the junior lien holder must agree either to remove his lien in return for a portion of the proceeds from the refinancing or re - subordinate his claim to the new loan. the valuation of the junior lien holder's claim on the property is often difficult to negotiate. one way of dealing with this problem in the case of a restructuring with an fha - insured mortgage is to offer a junior lien holder a specified share of the government's or investor's " soft second. " another way of dealing with junior liens is to provide the servicer with financial incentives to aggressively negotiate with the junior lien holder while capping any potential payout available to the junior lien holder from the government program. elements of these considerations are already reflected in the discussion draft. for example, title i of the discussion draft includes exit fees and shared appreciation mortgages to address concerns about borrower moral hazard. it also contains features to protect the taxpayer, such as widening the range of insurance premiums and creating a meaningful amount of borrower home equity. as for adverse selection, risk - based insurance premiums paid by the servicer are crucial, and title i could be clearer about the fha's authority to use risk - based premiums. other steps to guard against adverse selection could include a loan seasoning requirement or other forms of warranties given by the lender to the government about loan performance. given the magnitude of