A Viable Model to Replace Fannie and Freddie

Recent moves by the U.S. Treasury and Federal Housing Finance Agency to revamp the bailout of Fannie Mae and Freddie Mac make it “100% clear” that the mortgage-finance behemoths are on their way out, says Jack Guttentag, an emeritus professor of finance at Wharton. But even as the two giants are being phased out, the federal government hasn’t announced what will take their place — and that lack of a plan could make an already tight market even tougher, says Guttentag, who runs a website called The Mortgage Professor. In a new op-ed on Knowledge@Wharton, Guttentag discusses the implications of the phase-out on the current and future housing market, and analyzes the “nil” prospects for an immediate revival of the private secondary mortgage market. He cites Denmark as an example of a place where a robust secondary market exists.

Knowledge @ Wharton

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