Apply HFA Model to GSE Reform

Testimony from the Senate Banking, Housing, and Urban Affairs’ hearing on how GSE reform will influence the capacity and ongoing viability of small banks:

Skillern is suggesting that the current GSE model, where a government-sponsored entity buys loans and packages them into pass-through securities, should be changed. He is suggesting a model based upon state housing finance agencies. Many of the HFA’s operate without subsidy. In general, a housing finance agency system would be smaller. It would still push more ownership of mortgage-backed securities in to the domain of privately-held companies, but it would still allow for some government intervention to creating opportunity in underserved communities.