Do the GSEs Matter to Low-Income Housing Markets? An Assessment of the Effects of the GSE Loan Purchase Goals on California Housing Outcomes (Revised)

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  • 1 January 2005
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      • Published in RePEc
Abstract
This study evaluates the effects of GSE mortgage purchase activity on homeownership and housingconditions among communities that are the focus of the 1992 GSE Act and the HUD affordablehousing goals. To identify GSE effects, the test framework exploits differences in the definition oflower-income neighborhoods under the 1992 GSE Act, which establishes regulation for the GSEs, andthe 1977 Community Reinvestment Act, which lays out regulation for Federally-insured depositoryinstitutions. Research findings indicate limited direct effects of GSE loan purchase activity on localhousing markets. However, results do evidence a threshold level of GSE activity below whichsignificantly adverse local housing market outcomes are recorded. These findings suggest theimportance of GSE home loan purchases among low-income neighborhoods in efforts to achieve theGSE and HUD affordable housing goals.
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