Authors:

  • David Scharfstein
  • Adi Sunderam

Excerpt

The Economics of Housing Finance Reform. David Scharfstein and Adi Sunderam, August 1, 2011, Paper. “This paper analyzes the two leading types of proposals for reform of the housing finance system: (i) broad-based, explicit, priced government guarantees of mortgage-backed securities (MBS) and (ii) privatization. Both proposals have drawbacks. Properly-priced guarantees would have little effect on mortgage interest rates relative to unguaranteed mortgage credit during normal times, and would expose taxpayers to moral-hazard risk with little benefit…” Link