Resolving the Contested Future of the GSEs

The Stakes Are High

Bibliographic Data

ID21633658
AuthorsEdward Golding (Urban Institute), Susan M Wachter (0000-0002-4462-1728, University of Pennsylvania, corresponding author), SUSAN WACHTER (The Wharton School, University of Pennsylvania)
Year2025
Pages1-14
Publication date2025-11-17
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueHousing Policy Debate (JOURNAL)
Journal identifiersISSN: 1051-1482 • E-ISSN: 2152-050X
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/10511482.2025.2570726
OpenAlexW4416280543
LanguageEN
Citations received2
References cited11

Seventeen years after entering conservatorship, Fannie Mae and Freddie Mac remain central to the future of U.S. housing finance. This paper evaluates the feasibility of their exit from conservatorship without Congressional action, assessing repayment of the federal bailout, capital adequacy under current regulatory frameworks, and the durability of structural reforms. It puts forth a utility model that preserves liquidity, affordability, and mission alignment while mitigating risks of increased mortgage costs. Treasury mechanisms—including commitment fees and stock warrant monetization—are examined as tools to support affordable housing and fulfill charter mandates. A carefully structured exit, supported by robust oversight and capital standards, can balance adequate financial returns with public purpose. A regulatory framework that maintains stable lending standards and pricing over the business cycle is essential to reducing investor-required returns and enhancing affordability, thereby resolving the contested future of the GSEs

Capital requirement · Charter · Collateral · Incentive · Real estate · Treasury · Warrant · Housing Market and Economics · Housing, Finance, and Neoliberalism · Urban Planning and Valuation

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