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  • Commentary posted February 15, 2011 by David C. John Get Rid of Fannie Mae and Freddie Mac

    The era of Fannie Mae and Freddie Mac is over, and it is time to formally close them down. The activities of the two government-sponsored enterprises (GSEs) played a major role in the 2008 financial crash and have so far cost taxpayers over $150 billion to cover their losses; more is yet to come. Efforts to reform or refine their roles are misguided at best. Nothing short…

  • Commentary posted November 8, 2013 by James L. Gattuso, Norbert J. Michel, Ph.D. Give markets a try

    Five years ago, financial markets were rocked by news that Fannie Mae and Freddie Mac – two privately-owned but government-sponsored firms considered mainstays of the U.S. housing finance system – had been placed into conservatorship by federal officials. Their collapse was quickly followed by the near-collapse of other financial giants invested in housing related…

  • Backgrounder posted March 16, 2014 by Romina Boccia Revealing Fannie Mae’s and Freddie Mac’s Budget Costs: A Step Toward GSE Elimination

    The current budgetary treatment of Fannie Mae and Freddie Mac as off-budget federal entities, meaning that they are excluded from budgeting rules and processes, creates deficit reduction in appearance only with several ill effects. The current cash-flow approach used to report the impact of government-sponsored enterprises (GSEs) on federal finances fails to account…

  • Issue Brief posted August 1, 2016 by John L. Ligon Mortgage Principal Forgiveness Policy Is a Bad Idea

    The Federal Housing Finance Agency (FHFA) continues to pivot on mortgage principal forgiveness policy, initiating a new program that would subsidize a permanent reduction of a portion of unpaid mortgage principal owed by homeowners. The mortgage principal forgiveness program would give preference to some homeowners already in the Fannie Mae-guaranteed and Freddie…

  • WebMemo posted July 15, 2008 by David C. John Congress Should Fix the Fannie Mae and Freddie Mac Mess

    Sunday's announcement by the Bush Administration and the Federal Reserve seems to have cooled the immediate crisis concerning Fannie Mae and Freddie Mac. However, their plan does nothing to resolve the fundamental cause of the problem, and without major structural reforms in the housing finance industry, it is probable that this whole situation will reoccur in a few…

  • Issue Brief posted November 27, 2012 by David C. John Stop the Menendez–Boxer Sideshow: End Fannie Mae and Freddie Mac Now

    It is time to end Fannie Mae and Freddie Mac. For over four years, Congress has failed to start the process of phasing out the two failed mortgage finance giants and replace them with a private-sector mortgage finance system. Most of the time, opponents used the excuse that housing markets were just too weak to do anything that might delay the housing recovery, leaving…

  • Special Report posted June 11, 2012 by Nahid Anaraki A Housing Market Without Fannie Mae and Freddie Mac: Effect on the Homeownership Rate

    Executive Summary For decades, Fannie Mae and Freddie Mac followed securitization policies that enabled Americans to make a low down payment when they purchased a house. This study analyzes the impact of affordable lending efforts by government-sponsored entities (GSEs) on national homeownership rate, by race, ethnic group, and census region. The results of this…

  • Special Report posted October 4, 2012 by Nahid Anaraki A Housing Market Without Fannie Mae and Freddie Mac: The Effect on Housing Starts

    Executive Summary This paper tries to capture the effects of interventions by government-sponsored enterprises (GSEs) in the housing market by creating a hypothetical scenario in which one could see what would happen to housing starts without Fannie Mae and Freddie Mac. Housing starts are an especially important indicator of overall strength in the housing sector…

  • Issue Brief posted November 7, 2013 by Norbert J. Michel, Ph.D., John L. Ligon GSE Reform: Trust Funds or Slush Funds?

    Should Fannie Mae and Freddie Mac—the two government-sponsored housing enterprises (GSEs) in federal conservatorship since 2008—be required to use taxpayer money to fund housing advocacy groups’ activities? Five years ago, Congress answered “yes” to this question. The requirement has been in limbo since the GSEs collapsed, but that is only because Ed DeMarco, the acting…

  • Backgrounder posted November 7, 2013 by Norbert J. Michel, Ph.D., John L. Ligon Fannie and Freddie: What Record of Success?

    The fact that Fannie Mae has been around since the 1930s has led some to suggest the U.S. housing system functioned beautifully until the recent crisis. One policy analyst recently stated that under the system of government-sponsored enterprises (GSEs), “Mortgage credit was continuously available well into the late-1990s under terms and at prices that put sustainable…

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  • Issue Brief posted August 1, 2016 by John L. Ligon Mortgage Principal Forgiveness Policy Is a Bad Idea

    The Federal Housing Finance Agency (FHFA) continues to pivot on mortgage principal forgiveness policy, initiating a new program that would subsidize a permanent reduction of a portion of unpaid mortgage principal owed by homeowners. The mortgage principal forgiveness program would give preference to some homeowners already in the Fannie Mae-guaranteed and Freddie…

  • Issue Brief posted August 11, 2014 by Norbert J. Michel, Ph.D., John L. Ligon Five Guiding Principles for Housing Finance Policy: A Free-Market Vision

    The two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, remain under government conservatorship with the federal government standing behind all of their obligations. Housing finance reform is likely to be addressed during the next congressional session, but it appears the House and the Senate may offer very different reform proposals. Congress…

  • Backgrounder posted March 16, 2014 by Romina Boccia Revealing Fannie Mae’s and Freddie Mac’s Budget Costs: A Step Toward GSE Elimination

    The current budgetary treatment of Fannie Mae and Freddie Mac as off-budget federal entities, meaning that they are excluded from budgeting rules and processes, creates deficit reduction in appearance only with several ill effects. The current cash-flow approach used to report the impact of government-sponsored enterprises (GSEs) on federal finances fails to account…

  • Issue Brief posted November 12, 2013 by Norbert J. Michel, Ph.D., John L. Ligon GSE Reform: Affordable Housing Goals and the “Duty” to Provide Mortgage Financing

    As Congress considers legislation to eliminate the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, advocacy groups are pressuring financial institutions to adhere to a “duty to serve” their markets rather than to meet specific affordable housing goals. The “duty to serve” is a nebulous concept that codifies the idea that the GSEs (and lenders) have a…

  • Issue Brief posted November 7, 2013 by Norbert J. Michel, Ph.D., John L. Ligon GSE Reform: Trust Funds or Slush Funds?

    Should Fannie Mae and Freddie Mac—the two government-sponsored housing enterprises (GSEs) in federal conservatorship since 2008—be required to use taxpayer money to fund housing advocacy groups’ activities? Five years ago, Congress answered “yes” to this question. The requirement has been in limbo since the GSEs collapsed, but that is only because Ed DeMarco, the acting…

  • Backgrounder posted November 7, 2013 by Norbert J. Michel, Ph.D., John L. Ligon Fannie and Freddie: What Record of Success?

    The fact that Fannie Mae has been around since the 1930s has led some to suggest the U.S. housing system functioned beautifully until the recent crisis. One policy analyst recently stated that under the system of government-sponsored enterprises (GSEs), “Mortgage credit was continuously available well into the late-1990s under terms and at prices that put sustainable…

  • Issue Brief posted July 22, 2013 by John L. Ligon Hensarling Housing Finance Plan: A Welcome Step Toward Solving the Fannie and Freddie Mess

    Representative Jeb Hensarling (R–TX) has released a discussion draft of a proposal, known as the Protecting American Taxpayers and Homeowners (PATH) Act, that would wind down the federally sponsored housing finance agencies Fannie Mae and Freddie Mac and move the U.S. toward a housing finance system that protects both taxpayers and homeowners. The draft is a marked…

  • Backgrounder posted April 10, 2013 by David C. John Eight Steps to Eliminate Fannie Mae and Freddie Mac—Permanently

    Now that housing is beginning to show signs of a sustained recovery, it is time to create a new and modern private-sector housing finance system to replace the two government-sponsored enterprises (GSEs)—the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac)—that caused many of the problems. Between the time…

  • Issue Brief posted January 11, 2013 by John L. Ligon, David B. Muhlhausen, Ph.D. The Role of GSEs in the Housing Market

    The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), the major housing government-sponsored enterprises (GSEs), hold dominant positions in the U.S. mortgage market. They have likely passed a mortgage interest rate subsidy of 25–50 basis points to homebuyers through their interventions in the housing market,…

  • Special Report posted January 8, 2013 by John L. Ligon, William W. Beach Housing Market Without Fannie Mae and Freddie Mac: Economic Effects of Eliminating Government-Sponsored Enterprises in Housing

    The Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), the major government-sponsored enterprises (GSEs) devoted to housing, hold dominant positions in the U.S. mortgage market.[1] These institutions, while private corporations, have long maintained a special status with the federal government. Prior to federal…

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