The Devil's in the Tail: Residential Mortgage Finance and the US Treasury

23 Pages Posted: 6 Nov 2015

See all articles by W. Scott Frame

W. Scott Frame

Federal Reserve Bank of Dallas

Larry D. Wall

Federal Reserve Bank of Atlanta - Research Department

Lawrence J. White

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

Date Written: 2013

Abstract

This paper seeks to contribute to the US housing finance reform conversation by providing a critical assessment of the various types of policy proposals that have been offered. There appears to be a broad consensus to maintain explicit government guarantees for certain narrowly defined borrower populations, such as Federal Housing Administration (FHA) insurance guarantees for low- and moderate-income and first-time homebuyers. However, the expected role of the federal government in the broader housing finance system is in dispute: ranging from no role; to insuring against only extreme or tail events; to insuring against all losses.However, most proposals agree that any public insurance be priced and available only for loans that meet prespecified criteria in an effort to limit taxpayer exposure.

Suggested Citation

Frame, W. Scott and Wall, Larry D. and White, Lawrence J., The Devil's in the Tail: Residential Mortgage Finance and the US Treasury (2013). Journal of Applied Finance (Formerly Financial Practice and Education), Vol. 23, No. 2, 2013. Available at SSRN: https://ssrn.com/abstract=2684018

W. Scott Frame (Contact Author)

Federal Reserve Bank of Dallas ( email )

2200 N Pearl Street
Dallas, TX 75201
United States
214-922-6984 (Phone)

Larry D. Wall

Federal Reserve Bank of Atlanta - Research Department ( email )

1000 Peachtree Street, NE
Atlanta, GA 30309-4470
United States
404-498-8937 (Phone)
404-498-8956 (Fax)

HOME PAGE: http://www.frbatlanta.org/econ_rd/bios/wall.htm

Lawrence J. White

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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