The Government-Sponsored Enterprises and the Mortgage Crisis: The Role of the Affordable Housing Goals
Real Estate Economics, Forthcoming
Posted: 3 Jan 2013
Date Written: January 3, 2013
I use regression discontinuity analysis to measure the effect of one of the Affordable Housing Goals, the Underserved Areas Goal (UAG), on the number of whole single-family mortgages purchased by Fannie Mae and Freddie Mac (GSEs) in undeserved census tracts for 1996-2002. Focusing additionally on tracts that became UAG-eligible in 2005-2006, I measure the effect of the UAG during peak years for the subprime market. The results suggest a small UAG effect and challenge the view that the goals caused the GSEs to supply substantially more credit to high-risk borrowers than they otherwise would have supplied during the subprime boom.
Keywords: GSE, government sponsored enterprises, affordable housing goals, subprime mortgages, subprime crisis, housing bubble
Suggested Citation: Suggested Citation