A private lender cooperative model for residential mortgage finance
AbstractWe describe a set of six design principles for the reorganization of the U.S. housing finance system and apply them to one model for replacing Fannie Mae and Freddie Mac that has so far received frequent mention but little sustained analysis – the lender cooperative utility. We discuss the pros and cons of such a model and propose a method for organizing participation in a mutual loss pool and an explicit, priced government insurance mechanism. We also discuss how these principles and this model are consistent with preserving the “to-be-announced,” or TBA, market – particularly if the fixed-rate mortgage remains a focus of public policy.
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Bibliographic InfoPaper provided by Federal Reserve Bank of New York in its series Staff Reports with number 466.
Date of creation: 2010
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-03 (All new papers)
- NEP-IAS-2010-09-03 (Insurance Economics)
- NEP-URE-2010-09-03 (Urban & Real Estate Economics)
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