Home ownership rate

GSEs: Reforms at the Margin

To borrow a phrase, a crisis as deep as the 2007-2008 collapse of U.S. housing finance is a terrible thing to waste. Yet, nearly eight years after investors shunned their debt, Fannie Mae and Freddie Mac remain in federal conservatorship. And there is no end in sight to the government’s dominant role in housing finance: securitizations by the GSEs and federal agencies still accounted for nearly 70% of originations in 2015 (with qualifying loan-to-value ratios as high as 97%).  Despite this extensive government intervention in mortgage finance, the U.S. home ownership rate fell to 63.6% last year, its lowest level since 1966.

To say that U.S. housing finance is both inefficient and risky seems a dramatic understatement... 

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