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GSEs followed the private market into subprime

by Sarah Jawaid, National Housing Conference

In a New York Times column, Joe Nocera offered a concise assessment of Fannie Mae and Freddie Mac as followers, rather than prime movers, in the subprime mortgage crisis. In fact, he makes it clear that the GSEs were hesitant to join the subprime game but eventually caved after continuously losing market share to the private sector in 2005 and 2006. Citing data from David Min of the Center for American Progress, Nocera, observes that Fannie and Freddie’s much lower delinquency rate than the national default rate (5.9% vs. 9.11%) suggests that far less of their portfolio is subprime than critic Peter Wallison has suggested.

Read more at the New York Times.

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