Alternative Assessments of GSE Performance, Influence and Impact

Final Report for HUD, May 2006

Richard Williams
Department of Sociology, University of Notre Dame

Note: The free Acrobat Reader is needed for viewing the following documents.


The benefits of home ownership to both individuals and society are well known. It is not surprising, then, that policy makers have adopted a variety of approaches to promote homeownership in the United States.  Among these are the special rights and privileges given to the Government Sponsored Enterprises, Fannie Mae and Freddie Mac.  The GSEs are expected, indeed mandated, to "lead the mortgage finance industry in making credit available for low- and moderate-income families."  Previous studies have concluded that the GSEs were not leading the market.  The ultimate conclusion of this study is the same.  But, by virtually every criterion examined in this paper, it is also clear that in recent years the GSEs made noteworthy progress. 

Using HMDA and GSE data sets, we conduct descriptive and multivariate analyses of nationwide lending between 1993 and 2003. In recent years, the GSEs have been much less likely to serve the least underserved of the underserved.  Obstacles to underserved market purchases by the GSEs have diminished albeit not disappeared altogether.  With the GSEs doing a better job of serving all members of underserved markets, the need for subgoals or alternative goals is perhaps less great now than it was a few years ago.  Lenders that do the most business with the GSEs are also doing a better job of serving underserved markets.

Still, concerns remain that government regulators, lenders and the GSEs themselves should consider.  The GSEs have made significant gains with underserved markets but, for the most part, they still do not lead.  Exercising greater influence on their partners, expanding their efforts in the subprime and manufactured housing arenas, reaching out to Hispanics, and stronger efforts by Freddie Mac in particular, are all possible means by which the GSEs could better serve underserved markets.


Executive Summary (5 pages, 30K).  View this to see all the topics covered in the report.

Complete Final Report, May 2006 (83 pages, 1.41M)

The report is also available directly from the HUD web pages.


Residential Segregation and the Transformation of Home Mortgage Lending (Social Forces, December 2007)

Alternative Assessments of GSE Performance, Influence and Impact (Final Report for HUD, May 2006)

The Changing Face of Inequality in Home Mortgage Lending (Social Problems, May 2005)

Are the GSEs Leading, and If So Do They Have Any Followers? An Analysis of the GSEs - Impact on Home Purchase Lending to Underserved Markets During the 1990s (Final Report for HUD, December 2002)

The Effect of GSEs, CRA, and Institutional Characteristics on Home Mortgage Lending to Underserved Markets  (Final Report for HUD, December 1999; slightly revised version published in Cityscape, 2001)

Racial, Economic and Institutional Differences in Home Mortgage Loans: St. Joseph County, Indiana (Journal of Urban Affairs, 1997)