If We Aren’t Careful with GSE Risk Transfer, Mortgage Rates Could Become Volatile
Urban Institute, June 9, 2016–Kaul, Karan
Today, the guarantee fees borrowers pay on mortgages backed by the GSEs are set by the Federal Housing Finance Agency. The fees do not change with market conditions, largely insulating borrowers from significant mortgage rate volatility. But in a future housing finance system, private capital (rather than the government) will bear most credit risk.
