The Future of the Government Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market
This paper analyzes options for reforming the U.S. housing finance system in view of the failure of Fannie Mae and Freddie Mac as government sponsored enterprises (GSEs). The options considered include GSE reform, a range of possible new governmental mortgage guarantee plans, and greater reliance on private mortgage markets. The analysis also considers the likely consequences of adopting alternative roles for government in the U.S. housing and mortgage markets. We start by reviewing the history of the GSEs and their contributions to the operation of U.S. housing and mortgage markets, including the actions that led to their failure in conjunction with the recent mortgage market crisis. The reform options we consider include those proposed in a 2011 U.S. Treasury White Paper, plans for new government mortgage guarantees from various researchers and organizations, and the evidence from Western European countries for the efficacy of private mortgages markets.
We are grateful to the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
The Future of the Government-Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market, Dwight Jaffee, John M. Quigley. in Housing and the Financial Crisis, Glaeser and Sinai. 2013