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Housing Finance: Potential Reforms to Mortgage Markets

Housing Finance: Potential Reforms to Mortgage Markets
  • The actions taken in the aftermath of the Great Recession allayed the economic burdens of the financial crisis, but the housing market still remains vulnerable to systemic problems that have not been effectively addressed.
  • While access to credit was justifiably tightened following the financial crisis, evidence suggests that new restrictions and standards may be excessively hindering homeownership growth.
  • Since 2008, the secondary mortgage market has seen a significant withdrawal of private capital and a greater involvement of Fannie Mae and Freddie Mac. Several proposals have outlined fundamental overhauls to restore the presence of private capital, but policymakers must reform the market to foster competition and accountability without sacrificing stability and liquidity.