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Despite ideological differences, there is common ground among current and former policymakers and other housing experts that the time to fix the housing finance system is now, according to the new Brookings Institution Press book “The Future of Housing Finance.”

The book, edited by Brookings Senior Fellow Martin Baily, features papers by former Federal Reserve Chairman Alan Greenspan; Karen Dynan and Ted Gayer, co-directors of the Brookings Economic Studies Program; Brookings Fellow Douglas Elliott; Robert Pozen, Chairman Emeritus of MFS Investment Management; David Scharfstein and Adi Sunderam of Harvard Business School; Peter Wallison, Fellow at the American Enterprise Institute; and Diana Hancock and Wayne Passmore of the Division of Research and Statistics at the Federal Reserve Board.

The authors discuss where to take the government-sponsored enterprises (GSEs) in the future, including the following ideas:

• The federal government has an appropriate role in stabilizing housing finance markets and assisting low- and middle-income home buyers but that the government has been doing too much in this area and doing it too expensively; the federal government should step back and let the private markets do more.

• A multi-year period is needed to transition from the current housing finance regime to any of the proposed ones—housing finance is too troubled and the GSEs are too important to reform immediately, although the decision-making should go forward now even if full implementation needs to be slow.

• Mixing credit guarantees and affordability efforts was a mistake; going forward, the authors say the housing affordability mission should lie with the Federal Housing Administration (FHA), the Department of Housing and Urban Development (HUD), and similar entities.

• Any government credit guarantees, apart from the affordability mission, should be priced explicitly at actuarially fair rates and not be provided implicitly at zero or low cost, as before.

• Any private credit guarantors with government backing should be severely limited in their ability to own substantial portfolios of mortgages or related securities.

• Any government housing subsidies should be calculated accurately and recorded in the federal budget.

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