The Government-Sponsored Enterprises and the Mortgage Crisis: The Role of the Affordable Housing Goals

Real Estate Economics, Forthcoming

Posted: 3 Jan 2013

See all articles by Valentin Bolotnyy

Valentin Bolotnyy

Harvard University - Department of Economics

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Date Written: January 3, 2013

Abstract

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

Bolotnyy, Valentin, The Government-Sponsored Enterprises and the Mortgage Crisis: The Role of the Affordable Housing Goals (January 3, 2013). Real Estate Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2196062

Valentin Bolotnyy (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

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