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

Valentin Bolotnyy

Real Estate Economics, 2014, vol. 42, issue 3, 724-755

Abstract: type="main">

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.

Date: 2014
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Working Paper: The Government-Sponsored Enterprises and the mortgage crisis: the role of the affordable housing goals (2012)
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