Publication Date:
Mon, 2011-01-31 10:21
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A report from the liberal Center for American Progress calls for attracting as much private money as possible into the mortgage market, The Wall Street Journal [1] reported.
Currently, nine of out 10 new loans have some kind of government backing. The new proposal recommends private firms, chartered by a federal regulator, issue mortgage-backed securities. Those securities would carry explicit government guarantees.
If a mortgage became insolvent, the government would guarantee payments to investors, but it would not rescue the firm. The authors estimate that mortgage rates would go up about 0.5 percentage points under such a plan.
