Government Mortgage Interest Rates: A Serious Discussion about the Intertwined Topics of Risk Adjustment and Cross-subsidies
The Stoop (NYU Furman Center)
MAY 31, 2023
Over the near century of evolution of this dominant government role, the business model used by all four agencies has come to rely on packaging those loans into mortgage-backed securities (MBS) and then guaranteeing the investors in the MBS against credit losses on the underlying mortgage loans. 3 This business model is very complex.
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