A fully privatized mortgage market would drop mortgage rates and house prices, according to a white paper released earlier this week by Moody’s Analytics chief economist Mark Zandi. Zandi proposes a hybrid mortgage system that is part private and part public. To replace Fannie Mae and Freddie Mac, he recommends creating “between five and 10 privately owned, but government-chartered ‘mortgage bond insurance companies’ that buy eligible loans from banks and issue mortgage-backed securities explicitly guaranteed by the U.S. government.”

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