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The Devil's in the Tail: Residential Mortgage Finance and the U.S. Treasury

Authors: Frame, W. Scott
Wall, Larry D.
White, Lawrence J.
Keywords: residential mortgages, securitization;government-sponsored enterprises, housing subsidies.
Issue Date: 15-Aug-2012
Abstract: This paper seeks to contribute to the U.S. housing finance reform conversation by providing a critical assessment of the various types of policy proposals that have been offered. There appears to be a broad consensus to maintain explicit government guarantees for certain narrowly defined borrower populations, such as FHA insurance guarantees for low- and moderate-income and first-time homebuyers. However, the expected role of the federal government in the broader housing finance system is in dispute: ranging from no role; to insuring against only extreme or tail events; to insuring against all losses. However, most proposals agree that any public insurance be priced and available only for loans meeting pre-specified criteria in an effort to limit taxpayer exposure.
Rights: Copyright W. Scott Frame, Larry D. Wall, and Lawrence J. White, 2012.
Appears in Collections:Economics Working Papers

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