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The U.S. Housing Finance Debacle, Measures to Assure its Non-Recurrence and Reform of the Housing GSEs


  • Ronald W. Spahr

    () (University of Memphis)

  • Mark A. Sunderman

    () (University of Memphis)


We provide another perspective regarding Fannie Mae's and Freddie Mac's impact on the recent financial crisis. We conclude that the crisis and the GSEs being placed into conservancy were primarily caused by the proliferation of below prime mortgages, which led to their sustaining significantly higher default losses. We posit that the GSEs have unfairly served as scapegoats, whereas the crisis was largely caused by the proliferation of private label subprime mortgage instruments and by the U.S. Congress implementing social policies thru the GSEs without adequate default risk provisions. Our recommendations provide guidelines that may reduce the likelihood of a future similar crisis.

Suggested Citation

  • Ronald W. Spahr & Mark A. Sunderman, 2014. "The U.S. Housing Finance Debacle, Measures to Assure its Non-Recurrence and Reform of the Housing GSEs," Journal of Real Estate Research, American Real Estate Society, vol. 36(1), pages 59-86.
  • Handle: RePEc:jre:issued:v:36:n:1:2014:p:59-86

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services


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