Document Type
Article
Comments
This article predates the author's affiliation with Cornell Law School. It was published in The Hill (December 7, 2016).
Abstract
Fannie Mae and Freddie Mac, the two mortgage giants under the control of the federal government, have more than 45 percent of the share of the $10 trillion of mortgage debt outstanding. Ginnie Mae, a government agency that securitizes Federal Housing Administration (FHA) and Veterans Affairs (VA) mortgages, has another 16 percent.
These three entities together have a 98 percent share of the market for new residential mortgage-backed securities. This government domination of the mortgage market is not tenable and is, in fact, dangerous to the long-term health of the housing market, not to mention the federal budget.
No one ever intended for the federal government to be the primary supplier of mortgage credit. This places a lot of credit risk in the government’s lap. If things go south, taxpayers will be on the hook for another big bailout.
It is time to implement a housing finance reform plan that will last through the 21st century, one that appropriately allocates risk away from taxpayers, ensures liquidity during crises, and provides access to the housing markets to those who can consistently make their monthly mortgage payments.
Date of Authorship for this Version
12-7-2016
Keywords
Housing finance reform
Recommended Citation
Reiss, David J., "It's Time to Take Housing Finance Reform Through The 21st Century" (2016). Cornell Law Faculty Working Papers. 184.
https://scholarship.law.cornell.edu/clsops_papers/184