The federal government plays a substantial role in the housing market. Fannie Mae and Freddie Mac purchase and guarantee loans from banks and other lenders, and the Federal Housing Administration and some other agencies increase the availability of mortgages by assuming most of the risk of default on loans to eligible home buyers. In addition, the federal tax code encourages home ownership by allowing deductions of mortgage interest and property taxes and excluding most capital gains from taxation when a home is sold. CBO's work (including its analysis of Fannie Mae and Freddie Mac) assesses the effects of those policies and the impact of legislative proposals regarding the housing market.
CBO examined three options for Fannie Mae and Freddie Mac to use principal forgiveness for certain underwater borrowers. How would those options affect the number of mortgage defaults, the federal budget, and the overall economy?
Feb 2013 - During the past 40 years, federal spending for major means-tested programs and tax credits for low-income households more than tripled as a share of gross domestic product. In 2012, such spending totaled $588 billion.
Dec 2010 - This study looks at how Fannie Mae and Freddie Mac evolved into the institutions they are today.
The Budgetary Cost of Fannie Mae and Freddie Mac and Options for the Future Federal Role in the Secondary Mortgage Market
June 2011 - Testimony before the Committee on the Budget, U.S. House of Representatives.
May 2011 - Letter to the Honorable Paul Ryan.
Nov 2009 - This CBO brief describes, in broad terms, the array of federal activities that support housing and the expansion of particular programs.
- cost estimateNovember 18, 2013
- cost estimateOctober 28, 2013
- blog postOctober 22, 2013
- reportJune 18, 2013
- cost estimateJune 13, 2013
S.J. Res. 12, a joint resolution to consent to certain amendments enacted by the legislature of the State of Hawaii to the Hawaiian Homes Commission Act, 1920cost estimateMay 30, 2013
- reportMay 23, 2013
Options for Principal Forgiveness in Mortgages Involving Fannie Mae and Freddie Mac: Working Paper 2013-02working paperMay 1, 2013
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