The Way Forward: U.S. Residential Mortgage Finance in a Post-GSE World

24 Pages Posted: 10 May 2011

See all articles by Lawrence J. White

Lawrence J. White

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics

Date Written: March 3, 2011

Abstract

The “government-sponsored enterprise” (GSE) system of residential mortgage finance is clearly broken. But what will replace it remains an unanswered question. This paper lays out a vision for how private markets would – if given the opportunity – replace the GSEs and provide a fully functioning secondary market for residential mortgages. In the event that the private sector is deemed inadequate for the task, this paper also proposes a “side-by-side” private/government form of mortgage guarantee that would be superior to the “tail risk” or “catastrophe” government insurance proposals that have circulated as alternatives to the GSEs.

Keywords: secondary mortgage market, mortgage-backed securities, mortgage guarantees, fixed rate

JEL Classification: G21, G28

Suggested Citation

White, Lawrence J., The Way Forward: U.S. Residential Mortgage Finance in a Post-GSE World (March 3, 2011). Available at SSRN: https://ssrn.com/abstract=1836750 or http://dx.doi.org/10.2139/ssrn.1836750

Lawrence J. White (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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