Mortgage Reform and the Countercyclical Role of the Federal Housing Administration's Mortgage Mutual Insurance Fund

16 Pages Posted: 19 Dec 2012

See all articles by Brent C. Smith

Brent C. Smith

Virginia Commonwealth University

Date Written: 2011

Abstract

It has been 75 years since the Federal Housing Administration (FHA) was established and it is again serving as the primary backstop in the current housing market downturn, insuring roughly 39 percent of all new purchase loans. This countercyclical role for the FHA, with respect to the housing market cycle, does not come without costs, and the main cost is the risk of new lending in a market with declining house values. As current discussion on mortgage finance reform focuses on the role, or elimination, of the government-sponsored enterprises, the countercyclical future role of, and the level of reliance on, the FHA should be at the center of the debate.

Suggested Citation

Smith, Brent C., Mortgage Reform and the Countercyclical Role of the Federal Housing Administration's Mortgage Mutual Insurance Fund (2011). FRB Richmond Economic Quarterly, vol. 97, no. 1, First Quarter 2011, pp. 95-110, Available at SSRN: https://ssrn.com/abstract=2190608

Brent C. Smith (Contact Author)

Virginia Commonwealth University ( email )

1015 Floyd Avenue
Richmond, VA 23284
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
30
Abstract Views
407
PlumX Metrics