Housing Finance Working Paper Series

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The main purpose of this study is to assess the extent to which Fannie Mae and Freddie Mac are funding home loans for low-income borrowers and others who historically have not been well served by the mortgage market. The study is the most recent of several working papers and analyses examining the affordable lending performance of these two Government Sponsored Enterprises (GSEs) in the secondary mortgage market. This study, which updates earlier analyses to include data for years 2004 and 2005, compares the borrower and neighborhood characteristics of single-family mortgages purchased by Fannie Mae and Freddie Mac with the characteristics of home loans originated in the primary market during the same time period. This issue of the GSEs' affordable lending performance has been highlighted by the new affordable housing regulations that the Department of Housing and Urban Development (HUD) issued for Fannie Mae and Freddie Mac in 2004, reports by the Congressional Budget Office and Federal Reserve staff raising questions about the degree to which homeowners share in the Federal benefits received by the GSEs, and recent legislative proposals to alter the regulatory structure under which the GSEs operate.