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A Private Lender Cooperative Model for Residential Mortgage Finance

19 Pages Posted: 6 Aug 2010  

Toni Dechario

Federal Reserve Banks - Federal Reserve Bank of New York

Patricia C. Mosser

Federal Reserve Banks - Federal Reserve Bank of New York

Joseph S. Tracy

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

James I. Vickery

Federal Reserve Bank of New York

Joshua Wright

Federal Reserve Banks - Federal Reserve Bank of New York

Date Written: August 2010

Abstract

We describe a set of six design principles for the reorganization of the U.S. housing finance system and apply them to one model for replacing Fannie Mae and Freddie Mac that has so far received frequent mention but little sustained analysis – the lender cooperative utility. We discuss the pros and cons of such a model and propose a method for organizing participation in a mutual loss pool and an explicit, priced government insurance mechanism. We also discuss how these principles and this model are consistent with preserving the “to-be-announced,” or TBA, market – particularly if the fixed-rate mortgage remains a focus of public policy.

Keywords: GSE, MBS, mortgage

JEL Classification: G21, E02, G28, G01

Suggested Citation

Dechario, Toni and Mosser, Patricia C. and Tracy, Joseph S. and Vickery, James I. and Wright, Joshua, A Private Lender Cooperative Model for Residential Mortgage Finance (August 2010). FRB of New York Staff Report No. 466. Available at SSRN: https://ssrn.com/abstract=1653907 or http://dx.doi.org/10.2139/ssrn.1653907

Toni Dechario

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Patricia C. Mosser

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Joseph Tracy

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-6344 (Phone)
212-720-2630 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

James Ian Vickery (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Joshua Wright

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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