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The Role of the Affordable Housing Goals

In: The Subprime Crisis Lessons for Business Students

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  • Jaime Luque

    (1University of Wisconsin-Madison, USA)

Abstract

While beliefs differ as to what caused the subprime crisis, one popular theory is that the Affordable Housing Goals (AHG) instituted by the Clinton administration increased the prevalence of subprime lending by the government sponsored enterprises (GSEs), making things much worse when the bubble ultimately popped. To understand some of the circumstances in relation to the housing bubble, it is important to look at the role of GSEs. The first GSE was Fannie Mae. Fannie Mae and later Freddie Mac were created to increase liquidity within the credit market, and to also help maintain the secondary mortgage market. Originally, Fannie Mae purchased only Federal Housing Administration (FHA) insured mortgages, but eventually it began to purchase other classes of mortgages…

Suggested Citation

  • Jaime Luque, 2017. "The Role of the Affordable Housing Goals," World Scientific Book Chapters, in: The Subprime Crisis Lessons for Business Students, chapter 16, pages 133-139, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813200043_0016
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    More about this item

    Keywords

    Subprime Crisis; Great Recession; 2009 Recession; Mortgage; Financial Market; Preventing Recession; 2009 Crisis; Interest Rates;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G1 - Financial Economics - - General Financial Markets

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