On February 11, the House Committee on Financial Services Subcommittee on Housing and Insurance convened a hearing to examine homeownership and the role of the secondary mortgage market, with a focus on the ongoing conservatorship of government-sponsored enterprises (GSEs) (i.e., Fannie Mae and Freddie Mac) and related policy implications. The committee memorandum described the secondary mortgage market as being comprised of lenders who sell completed mortgages to third parties, which then pool them into mortgage-backed securities to be purchased by investors, thereby dispersing risk and replenishing capital for the lenders to make new loans. House Financial Services Committee Chairman French Hill (R-AR) explained that, while GSEs play a critical role in enhancing mortgage affordability, poor oversight and unchecked mission creep have historically resulted in serious costs being imposed on taxpayers and the U.S. economy. The committee also heard from several expert witnesses from the housing finance industry regarding policy proposals that could strengthen the secondary market.
[View source.]