This annual report describes FHFA's accomplishments, as well as challenges, the agency faced in meeting the strategic goals and objectives during the past fiscal year.
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Implement critical reforms that will produce a stronger and more resilient housing finance system.
FOSTER competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets that support sustainable homeownership and affordable rental housing; OPERATE in a safe and sound manner appropriate for entities in conservatorship; and PREPARE for eventual exits from the conservatorships.
2019 Conservatorships Strategic Plan
FHFA experts provide reliable data, including all states, about activity in the U.S. mortgage market through its House Price Index, Refinance Report, Foreclosure Prevention Report, and Performance Report.
FHFA economists and policy experts provide reliable research and policy analysis about critical topics impacting the nation’s housing finance sector. Meet the experts...
Paul E. Carrillo, George Washington University; William M. Doerner, FHFA; William D. Larson, FHFA;
The transaction price of identical housing units can vary widely due to heterogeneity in buyer and seller preferences, matching, and search costs, generating what we term "markups" above or below the average market price. We measure markups for 3.4 million purchase-money mortgages and show they can predict mortgage defaults and credit losses conditional on default even after accounting for collateral coverage (loan-to-value ratio) and a comprehensive set of other covariates. The findings suggest standard collateral coverage estimation may be inaccurate, with implications for both individual and portfolio-level credit risk assessment.
This research was selected as the best paper in 2018 in real estate valuation by the American Real Estate Society. A revised version of this paper has undergone external peer-review and has been accepted for publication in an academic journal with open (free) access. Citation: Paul E. Carrillo, William M. Doerner, William D. Larson. 2022. "House Price Markups and Mortgage Defaults." Journal of Money, Credit and Banking, forthcoming.
The transaction price of identical housing units can vary widely due to heterogeneity in buyer and seller preferences, appraisers, and search costs, generating "markups" above or below the average market price. These markups are mean reverting upon subsequent transactions, suggesting transitory factors play a role in same-unit dynamics. We show markups are an important driver of mortgage delinquencies, defaults, prepayments, and credit losses conditional on default. In general, our findings highlight several important aspects of mortgage risk management, including underwriting, insurance, and unit-level house value dynamics.
This research was selected as the best paper in 2018 in real estate valuation by the American Real Estate Society.
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