GSEs Help Increase Homeownership for Low- and Moderate Income Families

According to a new study released by HUD titled "An Analysis of
the Effects of the GSE Affordable Goals on Low- and Moderate
Income Families," Fannie Mae and Freddie Mac helped reduce the
disparity between homeownership rates for low- and moderate income
families by purchasing more loans originated to low-income
families and increasing their overall market share in the
conventional conforming mortgage market.

The report provides an empirical analysis of the lending
activities of Government Sponsored Enterprises (GSEs) resulting
from the Federal Housing Enterprises Financial Safety and
Soundness Act (FHEFSSA). Congress enacted the FHEFSSA in 1992 to
encourage Fannie Mae and Freddie Mac to increase their services to
low- and moderate income families and neighborhoods.

The study focuses on two major areas:
* Capital market outcomes, such as mortgage credit price and
quantity changes for targeted borrowers.
* Housing market outcomes, defined by homeownership rate changes
among low- and moderate income and minority families.
These outcomes were chosen because they are central to the GSEs'
stated objectives of making homeownership accessible to all who
qualify.

The study was based on theoretical and empirical analyses.
Researchers modeled the effects of GSEs' affordable housing goals
on the mortgage market based on a review of relevant literature.
The analyses considered such factors as decreasing interest rates,
rising incomes, and the effects of the Community Reinvestment Act,
which requires lenders to help meet the credit needs of the
communities they serve.

The findings offer some evidence that GSEs have helped make it
easier for low- and moderate income families to become homeowners
by increasing market share and adding liquidity in the
marketplace. However, the report does conclude that further
research using 2000 Census data would provide more definitive
results.

A complete copy of the report may be obtained from
https://www.huduser.gov

Please note that HUD USER has moved. You may wish to update your
contact information as follows:
HUD USER
P.O. Box 23268
Washington, DC 20026-3268
1-800-245-2691 (unchanged)
1-800-927-7589 (TDD) (updated)
202-708-9981 (fax) (updated)
--------------------------------------

The HUD USER News listserv was created to keep professionals in
the fields of housing and community development abreast of new
research and resources available from the U.S. Department of
Housing and Urban Development's Office of Policy Development and
Research (PD&R). Periodically, publications and announcements will
be sent via the listserv.

Share HUD USER's resources and information with a colleague.
Please consider forwarding this e-mail to an associate who may be
interested in the resources HUD USER has to offer. Thanks!

To stay abreast of new HUD research and resources, subscribe to
HUD USER News. This listserv will automatically e-mail you
publication announcements and other notices from HUD's Office of
Policy Development and Research.

To subscribe, send a message to:
hudusernews@huduser.gov

In the subject of the message, type: subscribe

For example:
To: hudusernews@huduser.gov
Subject: subscribe

You will receive a confirmation message with instructions on how
to post messages to the list, search the message archives, and how
to unsubscribe.

You may use your web browser to search the message archives at
https://www.huduser.gov/portal/elist/archive.html