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U.S. Congressional Budget Office Testified on Several Topics Related to the Government’s Mortgage Programs
CBO’s Assistant Director for Financial Analysis Deborah Lucas testified before the House Budget Committee on several topics related to the government’s mortgage programs.
- CBO’s estimates of the budgetary cost of the government’s takeover and continuing operation of Fannie Mae and Freddie Mac;
- How the budgetary treatment of those two enterprises differs from
that of the Federal Housing Administration (FHA) and other federal
mortgage programs and the potential problems those inconsistencies
cause; and
- Alternative options for the future role of the federal government in the secondary mortgage market.
Policymakers are contemplating a wide range of proposals for the federal role in the
secondary mortgage market in general, for the future of Fannie Mae and Freddie Mac in particular, and for the transition to a new model. The broad options include:
- Moving to a hybrid public/private approach that would involve explicit federal guarantees of some privately issued MBSs;
- Establishing a fully federal agency that would purchase and guarantee qualifying mortgages; or
- Promoting a fully private secondary mortgage market with no federal guarantees.
Any new approach would need to confront major design issues—if the
approach included federal guarantees, how to structure and price them;
whether to support affordable housing and, if so, by what means; and how
to structure and regulate the secondary market. In a recent study, CBO analyzed those alternatives and the trade-offs among them.
Read the complete Testimony>>
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