FHA, Fannie Mae, Freddie Mac and the Great Recession

An Options-Based Approach to Evaluating the Risk of Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac assume a significant amount of interest and prepayment risk and all of the credit risk for about half of the $8 trillion U.S. residential mortgage market. Their hybrid government-private status, and the perception that they are too big to fail, make them a potentially large, but largely unaccounted for, risk to the federal government. Measuring the size and risk of th...

Implications of the New Fannie Mae and Freddie Mac Risk - based Capital Standard

Economics at Columbia University, and Senior Director and Chairman of the Advisory Committee at Sebago Associates, Inc., an economic policy consulting firm. Dr. Stiglitz is the winner of the 2001 Nobel Prize in Economic Sciences. Previously, Dr. Stiglitz served as the World Bank’s Chief Economist and Senior Vice President for Development Economics and, before that, as the Chairman of the Presid...

Do Government Guarantees Inhibit Risk Management? Evidence from Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac’s implicit government guarantee is widely argued to cause irresponsible risk taking. Despite moral-hazard concerns, this paper presents evidence that Fannie Mae and Freddie Mac (the GSEs) more effectively managed home price risks during the 2000-2006 housing boom than private insurers. Mortgage origination data reveal that the GSEs were selecting loans with increasing...

Valuing Government Guarantees Fannie and Freddie Revisited

The Budgetary Cost of Fannie Mae and Freddie Mac and Options for the Future Federal Role in the Secondary Mortgage Market