The Congressional Budget Office (CBO) has released “Transitioning to Alternative Structures for Housing Finance: An Update”, which projects how an alternative housing finance structure would affect federal costs, taxpayer risk and mortgage interest rates. The report estimates that under current policy, the government sponsored enterprises (GSEs) will guarantee almost $12 trillion in new mortgage-backed securities (MBSs) over the next 10 years, which will cost the government about $19 billion on a fair-value basis. That cost represents the estimated amount that the government would have to pay private guarantors to bear the credit risks of the new guarantees. Three of the four approaches to restructuring the secondary market that CBO analyzed would keep some type of explicit federal guarantee of MBSs to provide stability to the market during a financial crisis, but the approaches differ in the extent to which private guarantors and investors would share risks under normal market conditions. The report also provides an analysis of new structures for the secondary market emphasizing that private capital would lead to slightly higher interest rates and slightly lower home prices under normal and stressed conditions. Last year, Enterprise released policy recommendations for housing finance reform, noting that any housing finance reform effort must seek to expand support for rental housing that is affordable to low- and moderate-income households and ensure access to affordable mortgages for underserved homebuyers.
Published by Oklahoma Coalition for Affordable Housing
The vision of OCAH: That all Oklahomans have the opportunity to live in safe, healthy and affordable homes. Our Mission: To lead the movement to ensure that all residents of the state of Oklahoma flourish in safe, affordable homes and to help communities develop safe and affordable housing options for all of their residents. We reach our mission through advocacy, education and practical training to foster the production and maintenance of affordable housing throughout the state. View all posts by Oklahoma Coalition for Affordable Housing