Fannie Mae and Freddie Mac in Nonmetropolitan Housing Markets: Does Space Matter?AbstractThis study investigates variations in government-sponsored enterprise (GSE) market shares among a sample of 426 nonmetropolitan counties in 8 census divisions. Conventional conforming mortgage originations are estimated using residential sales data adjusted to exclude Government-insured and nonconforming loans. Multivariate analysis is used to investigate whether GSE market shares differ significantly by location, after controlling for the economic, demographic, housing stock, and credit market differences among counties that could affect use of the secondary markets. The study also investigates whether Fannie Mae serves nonmetropolitan borrowers who are significantly different from those Freddie Mac serves.Spatial location contributes significantly to explaining variations in GSE market shares among nonmetropolitan counties, but its effects are specific. One region–nonadjacent West North Central counties–has significantly lower GSE market shares than all others. The disparity persists when we restrict the analysis to underserved counties. The study also suggests significant disparities between the income levels of the borrowers served by each agency, with Freddie Mac buying loans from borrowers with higher income ratios compared with those served by Fannie Mae. An important limitation on any study of nonmetropolitan mortgages is the lack of Home Mortgage Disclosure Act data. More precise conclusions about the extent to which the GSEs mirror primary mortgage originations are impossible. Fannie Mae and Freddie Mac in Nonmetropolitan Housing Markets: Does Space Matter? (*.pdf)
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