The U.S. housing market faces a “difficult” return to normal because government-sponsored enterprises own or guarantee most mortgage lending while alternative sources have disappeared, said an economist with the Federal Reserve Bank of San Francisco.
“Fannie Mae, Freddie Mac, and Ginnie Mae now own or guarantee an overwhelming share of originations,” bank senior economist John Krainer wrote in a paper released today. “At the same time, non-agency mortgage securitization and loans retained in lender portfolios have largely dried up.”
