Everywhere in the World, Governments Heavily Regulate the Home Mortgage Business

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


Yesterday I wrote about problems with the mortgage finance market, which are mostly due to the fact that private lenders aren’t interested in funding 30-year fixed-rate mortgages on their own. There’s just too much risk. This means that if we want the mortgage market to revive, Fannie Mae and Freddie Mac need to start guaranteeing these mortgages again in the same volumes they used to.

One obvious response to this is that the 30-year fixed mortgage wasn’t handed down on stone tablets from Mt. Sinai. It was an invention of the New Deal. Other countries get by just fine without them, and so can we. We should just get the government out of the mortgage market entirely and let banks make whatever kinds of loans they want.

We could do that. But it’s well to keep in mind that although other countries might not have outfits like Fannie Mae and Freddie Mac, they do have plenty of government regulation of the mortgage loan market. If you’re curious about how mortgages work outside the US, Michael Hiltzik provides a useful rundown of Canada here. Other countries work differently, but the principle is the same: there’s always supervision of some kind. Getting rid of Fannie and Freddie is a defensible option, but that doesn’t mean you’re getting rid of government regulation. You’ll just end up with different government regulation.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily bluster—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate