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Housing Policy, Mortgage Policy, and the Federal Housing Administration

In: Measuring and Managing Federal Financial Risk

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  • Dwight M. Jaffee
  • John M. Quigley

Abstract

This paper provides a survey of federal housing programs, establishing the primary importance of indirect and off-budget activities in promoting housing and providing subsidies to housing consumers. We consider the role of the Government Sponsored Enterprises (GSEs) and the Veterans’’ Administration in supplying liquidity and credit guarantees. We then consider in more detail the role of the FHA as supplier and guarantor of credit. We especially focus on the rationale for these activities in the light of the rise and subsequent collapse of the subprime mortgage market. We suggest that a reinvigorated FHA mortgage program will be highly useful in its own right and might be the appropriate agency to assume many of the activities currently undertaken by the GSEs.

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This chapter was published in:

  • Deborah Lucas, 2010. "Measuring and Managing Federal Financial Risk," NBER Books, National Bureau of Economic Research, Inc, number luca07-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 3040.

    Handle: RePEc:nbr:nberch:3040

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    References

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    1. Richard K. Green & Susan M. Wachter, 2005. "The American Mortgage in Historical and International Context," Working Paper, USC Lusk Center for Real Estate 9094, USC Lusk Center for Real Estate.
    2. Kerry D. Vandell, 1995. "FHA Restructuring Proposals: Alternatives and Implications," Wisconsin-Madison CULER working papers, University of Wisconsin Center for Urban Land Economic Research 95-09, University of Wisconsin Center for Urban Land Economic Research.
    3. Wayne Passmore & Shane M. Sherlund & Gillian Burgess, 2005. "The Effect of Housing Government-Sponsored Enterprises on Mortgage Rates," Real Estate Economics, American Real Estate and Urban Economics Association, American Real Estate and Urban Economics Association, vol. 33(3), pages 427-463, 09.
    4. repec:reg:wpaper:320 is not listed on IDEAS
    5. Alexei Tchistyi & Tomasz Piskorski, 2007. "Optimal Mortgage Design," 2007 Meeting Papers, Society for Economic Dynamics 537, Society for Economic Dynamics.
    6. Cass R. Sunstein & Richard H. Thaler, 2003. "Libertarian paternalism is not an oxymoron," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, vol. 48(Jun).
    7. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 281-310.
    8. Ambrose, Brent W. & Pennington-Cross, Anthony, 2000. "Local economic risk factors and the primary and secondary mortgage markets," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 30(6), pages 683-701, December.
    9. Giang Ho & Anthony Pennington-Cross, 2006. "The impact of local predatory lending laws on the flow of subprime credit," Working Papers, Federal Reserve Bank of St. Louis 2006-009, Federal Reserve Bank of St. Louis.
    10. Jaffee, Dwight M. & Quigley, John M., 2009. "The Government Sponsored Enterprises: Recovering From a Failed Experiment," Berkeley Program on Housing and Urban Policy, Working Paper Series, Berkeley Program on Housing and Urban Policy qt8v17v5vz, Berkeley Program on Housing and Urban Policy.
    11. Tomasz Piskorski & Alexei Tchistyi, 2010. "Optimal Mortgage Design," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 23(8), pages 3098-3140, August.
    12. repec:reg:rpubli:396 is not listed on IDEAS
    13. Deborah Lucas & Robert McDonald, 2010. "Valuing Government Guarantees: Fannie and Freddie Revisited," NBER Chapters, in: Measuring and Managing Federal Financial Risk, pages 131-154 National Bureau of Economic Research, Inc.
    14. Ambrose, Brent W. & Pennington-Cross, Anthony & Yezer, Anthony M., 2002. "Credit Rationing in the U.S. Mortgage Market: Evidence from Variation in FHA Market Shares," Journal of Urban Economics, Elsevier, vol. 51(2), pages 272-294, March.
    15. Quigley John M., 2008. "Compensation and Incentives in the Mortgage Business," The Economists' Voice, De Gruyter, De Gruyter, vol. 5(6), pages 1-3, October.
    16. repec:reg:wpaper:396 is not listed on IDEAS
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    Cited by:
    1. Case, Karl E. & Quigley, John M., 2008. "How Housing Booms Unwind: Income Effects, Wealth Effects, and Feedbacks Through Financial Markets," Berkeley Program on Housing and Urban Policy, Working Paper Series, Berkeley Program on Housing and Urban Policy qt1j05j7t5, Berkeley Program on Housing and Urban Policy.
    2. John Karikari & Ioan Voicu & Irene Fang, 2011. "FHA vs. Subprime Mortgage Originations: Is FHA the Answer to Subprime Lending?," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 43(4), pages 441-458, November.

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