Federal Taxpayers Should Not Cover Guarantees in Any Future Mortgage-Backed Securities Market

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Heritage Foundation

After nearly a decade since the 2008 financial crisis and collapse of the private label mortgage-backed securities market, the U.S. mortgage securitization market has remained almost exclusively within the domain of mortgage-backed securities guaranteed by Ginnie Mae, and the two government-sponsored enterprises Fannie Mae and Freddie Mac.
Both Fannie Mae and Freddie Mac remain in federal conservatorship.
The agencies’ dominance of the mortgage-backed securities market after the financial crisis has emboldened advocates to call for any reformed (and future) U.S. mortgage securitization market to include some form of federal government backstop.
Supporters generally argue for the guarantees because they generally cover certain risks to these financial products, and ensure the timely payment of pass-through income of mortgage principal and interest payments on these securities.

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Federal Housing Administration Should Not Terminate Mortgage Insurance Premiums

 

Only a few years after the Federal Housing Administration required $1.7 billion in special appropriations from Congress to cover losses in its single-family housing mortgage insurance program, some members of Congress now want to derail the agency’s efforts to return to some semblance of fiscal sanity.
Implementing these changes would be unfair to federal taxpayers that subsidize the cost of the Federal Housing Administration’s insurance programs, and to the private insurance companies that compete with the Federal Housing Administration.
What the Program Does
The Federal Housing Administration’s flagship program is the single-family housing mortgage insurance program, an insurance portfolio that has tripled in size over the last decade to almost $1.2 trillion.