Working Paper #746
Second Discussant Comment on “The Future of U.S. Housing Finance Reform”
Susan M. Wachter
Borrowing Constraints Mortgages United States
What are the likely long-term effects of the Great Recession? Clearly a changed housing finance system is one, although how the system will change in the long run is very much in question. The public debate is ongoing not only on what the new paradigm will be, but also on how we will get there. Swagel contributes to the discussion on both issues. Currently, we do have a new outcome, of course: the public option. With over 90 percent of financing for mortgages supported by public guarantees, we have federalized the housing finance system. The public option is an outcome that is meant to be temporary, but as recent Congressional action to lift the FHA lending ceiling demonstrates, moving on is hard to do.