GSE Guaranty Pricing Subsidizes Some Higher-Risk Mortgages Even as Loan Quality Improved in 2008
August 6, 2009
Fannie Mae and Freddie Mac boosted their guaranty pricing in 2008, especially for higher-risk mortgage products that still appear to be subsidized to some degree by less risky business, according to a new study by federal regulators. The government-sponsored enterprises in late 2007 woke up from an industry-wide fantasy in which mortgage credit risk was significantly underpriced because of...