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The Future of U.S. Housing Finance Reform

  • Phillip L. Swagel EMAIL logo
Published/Copyright: October 25, 2012
The B.E. Journal of Macroeconomics
From the journal The B.E. Journal of Macroeconomics Volume 12 Issue 3

Abstract

This paper proposes a reform for the U.S. housing finance system in which the private sector is the main supplier of capital for housing, while the U.S. government would provide a secondary guarantee on conforming mortgage-backed securities (MBS). Competition plays a key role, with multiple firms securitizing eligible loans into government-backed MBS, both to help address the problem under which the now-dominant firms of Fannie Mae and Freddie Mac are “too big to fail” and to help ensure that any implicit subsidy from underpriced government insurance flows through to homeowners in the form of lower interest rates. The paper discuss transition steps, including raising the price of the government guarantee, reducing the quantity of insurance offered by the government, narrowing the scope of mortgages eligible for the government insurance, and requiring firms that securitize government-insured MBS to arrange for more private capital in a first-loss position.

Published Online: 2012-10-25

© 2012 by Walter de Gruyter GmbH & Co.

Articles in the same Issue

  1. Introduction
  2. A Conference Overview
  3. Session 1
  4. The Statistical Behavior of GDP after Financial Crises and Severe Recessions
  5. First Discussant Comment on “The Statistical Behavior of GDP after Financial Crises and Severe Recessions”
  6. Second Discussant Comment on “The Statistical Behavior of GDP after Financial Crises and Severe Recessions”
  7. Session 2
  8. Shifting Confidence in Homeownership: The Great Recession
  9. First Discussant Comment on “Shifting Confidence in Homeownership: The Great Recession”
  10. Second Discussant Comment on “Shifting Confidence in Homeownership: The Great Recession”
  11. Session 3
  12. Potential Effects of the Great Recession on the U.S. Labor Market
  13. First Discussant Comment on “Potential Effects of the Great Recession on the U.S. Labor Market”
  14. Second Discussant Comment on “Potential Effects of the Great Recession on the U.S. Labor Market”
  15. Session 4
  16. The Future of U.S. Housing Finance Reform
  17. First Discussant Comment on “The Future of U.S. Housing Finance Reform”
  18. Second Discussant Comment on “The Future of U.S. Housing Finance Reform”
  19. Session 5
  20. Fiscal Policy as a Stabilization Tool
  21. First Discussant Comment on “Fiscal Policy as a Stabilization Tool”
  22. Second Discussant Comment on “Fiscal Policy as a Stabilization Tool”
  23. Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis? A Panel Discussion
  24. First Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis?”
  25. Second Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis?”
  26. Third Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis?”
  27. Speeches
  28. Global Financial Intermediaries: Lessons and Continuing Challenges
  29. The Effects of the Great Recession on Central Bank Doctrine and Practice
https://doi.org/10.1515/1935-1690.110

Articles in the same Issue

  1. Introduction
  2. A Conference Overview
  3. Session 1
  4. The Statistical Behavior of GDP after Financial Crises and Severe Recessions
  5. First Discussant Comment on “The Statistical Behavior of GDP after Financial Crises and Severe Recessions”
  6. Second Discussant Comment on “The Statistical Behavior of GDP after Financial Crises and Severe Recessions”
  7. Session 2
  8. Shifting Confidence in Homeownership: The Great Recession
  9. First Discussant Comment on “Shifting Confidence in Homeownership: The Great Recession”
  10. Second Discussant Comment on “Shifting Confidence in Homeownership: The Great Recession”
  11. Session 3
  12. Potential Effects of the Great Recession on the U.S. Labor Market
  13. First Discussant Comment on “Potential Effects of the Great Recession on the U.S. Labor Market”
  14. Second Discussant Comment on “Potential Effects of the Great Recession on the U.S. Labor Market”
  15. Session 4
  16. The Future of U.S. Housing Finance Reform
  17. First Discussant Comment on “The Future of U.S. Housing Finance Reform”
  18. Second Discussant Comment on “The Future of U.S. Housing Finance Reform”
  19. Session 5
  20. Fiscal Policy as a Stabilization Tool
  21. First Discussant Comment on “Fiscal Policy as a Stabilization Tool”
  22. Second Discussant Comment on “Fiscal Policy as a Stabilization Tool”
  23. Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis? A Panel Discussion
  24. First Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis?”
  25. Second Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis?”
  26. Third Panelist Remarks: “Will the Federal Reserve Be Able to Serve as the Lender of Last Resort in the Next Financial Crisis?”
  27. Speeches
  28. Global Financial Intermediaries: Lessons and Continuing Challenges
  29. The Effects of the Great Recession on Central Bank Doctrine and Practice
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