for Fannie Mae and Freddie Mac. We study a key component of OFHEOs model - 30-year fixed-rate mortgage performance - and … in a significant underprediction of mortgage credit losses and associated capital needs at Fannie Mae and Freddie Mac …

Sponsored Enterprises (such as Fannie Mae and Freddy Mac) in the mortgage market. In order to do so we construct a model with … heterogeneous, infinitely lived households and competitive housing and mortgage markets. Households have the option to default on … provided and tax-financed mortgage interest rate subsidy. We find that eliminating this subsidy leads to substantially lower …