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Federal credit and insurance programs: housing

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  • John M. Quigley

Abstract

This paper reviews the evolution of the major credit and insurance programs undertaken by the U.S. government in support of urban housing. As the review makes clear, the Federal Housing Administration (FHA), Veterans Administration, Federal National Mortgage Association, and Federal Home Loan Mortgage Corporation have played major roles in the development of liberal and efficient primary and secondary mortgage markets in the United States. The development of capacity in mortgage lending and securitization in the private sector does suggest, however, that federally subsidizing mortgage market activities can be restrained with little effect on homeownership-the principal goal of this federal activity. In particular, the orderly reduction in the mortgage investment activities of the government-sponsored enterprises (GSEs) and the imposition of guarantee fees on mortgage-backed securities insured by the GSEs are first steps in restraining federal activity. More generally, a concentration of FHA and GSE activity on first-time homebuyers would reduce federal risk exposure while preserving the economic rationale for government activity.

Suggested Citation

  • John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 281-310.
  • Handle: RePEc:fip:fedlrv:y:2006:i:jul:p:281-310:n:v.88no.4
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    Cited by:

    1. Dwight M. Jaffee & John M. Quigley, 1975. "Housing Policy, Mortgage Policy, and the Federal Housing Administration," NBER Chapters,in: Measuring and Managing Federal Financial Risk, pages 97-125 National Bureau of Economic Research, Inc.
    2. repec:eee:accfor:v:33:y:2009:i:2:p:114-126 is not listed on IDEAS
    3. Mark J. Flannery & W. Scott Frame, 2006. "The Federal Home Loan Bank system : the "other" housing GSE," Economic Review, Federal Reserve Bank of Atlanta, issue Q 3, pages 33-54.
    4. Andreas Pfingsten, 2009. "Das Sub-Prime-Virus: Ursachen und Folgen der Finanzkrise," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(1), pages 14-24.
    5. Bhardwaj, Geetesh & Sengupta, Rajdeep, 2012. "Subprime mortgage design," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1503-1519.
    6. Eva Terberger, 2009. "Subprime-Krise, strukturierte Finanzierung und die Förderung der Mikrokreditvergabe," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(1), pages 40-55.
    7. Paul S. Mills & John Kiff, 2007. "Money for Nothing and Checks for Free; Recent Developments in U.S. Subprime Mortgage Markets," IMF Working Papers 07/188, International Monetary Fund.
    8. David C. Wheelock, 2008. "The federal response to home mortgage distress: lessons from the Great Depression," Review, Federal Reserve Bank of St. Louis, issue May, pages 133-148.
    9. Richard J. Buttimer, 2011. "The financial crisis: imperfect markets and imperfect regulation," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 3(1), pages 12-32, April.
    10. Neil Bhutta, 2009. "Regression discontinuity estimates of the effects of the GSE act of 1992," Finance and Economics Discussion Series 2009-03, Board of Governors of the Federal Reserve System (U.S.), revised 01 Jan 2009.
    11. Courchane, Marsha J. & Darolia, Rajeev & Zorn, Peter M., 2014. "The downs and ups of FHA lending: The government mortgage roller coaster ride," Journal of Housing Economics, Elsevier, vol. 24(C), pages 39-56.
    12. 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 qt8v17v5vz, Berkeley Program on Housing and Urban Policy.
    13. Edward L. Glaeser, 2013. "A Nation Of Gamblers: Real Estate Speculation And American History," NBER Working Papers 18825, National Bureau of Economic Research, Inc.

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    Keywords

    Mortgage loans ; Housing - Finance;

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