Industry NewsMortgage

Diminished role for GSEs, FHA

Part 5: Midyear housing update

Editor's note: How bad will the real estate market get before it gets better? Inman News compiles the facts and analysis in this five-part series. (Read Part 1, "The housing market: How bad will it get?" Part 2, "Vendors cope with real estate downturn"; Part 3, "Market forces, regulators threaten credit crunch"; and Part 4, "Investor worries rise.") As market forces make it more expensive or impossible for some borrowers with poor credit to obtain a mortgage or refinance an existing exorbitant loan, some policymakers are wondering how government-supported loan guarantee and insurance programs fell out of favor with borrowers, and how to go about restoring them. Bundling up mortgage loans by the thousand as collateral for investments known as mortgage-backed securities (MBS) is a practice dating back to the 1970s. The practice took off with the introduction of collateralized mortgage obligations, or CMOs, which combine classes or "tranches" of MBS with varying degrees of risk and retu...