Improving U.S. Housing finance through reform of Fannie Mae and Freddie Mac: A framework for evaluating alternatives

As was noted in Chapter 1' the government-sponsored enterprises (GSEs) known as Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation)1 were' until recently' the largest players in a U.S. housing finance system that rovided mortgage financing for millions of Americans. Since early 2008' the firms' insolvency has called their future into question. This chapter lays out criteria for evaluating proposals for reform of the two firms. After we introduce the basic goals of a healthy secondary market for both the single-family and multi-family markets' we offer a framework that will help to describe and understand the different proposals for reform and how variants of Fannie and Freddie might fit into that picture.