Honors College

Document Type

Honors Thesis

Publication Date

Spring 2014


The purpose of this research was to explore the mortgage market in the United States and determine an effective plan of action moving forward. The US experienced a major housing crisis in 2007-2008. As a result, the market has been under significant scrutiny. At the heart of this debate are the two major lending institutions, Fannie Mae and Freddie Mac. The crisis has caused many politicians to call for an overhaul of the US mortgage market, a phasing out of the two agencies, and a shift in the market toward the private sector. A bipartisan proposal in March 2014 addressed those issues and will most likely be voted on in the Senate and the House this year.

Several questions arose during exploration of this topic. How can we help the secondary mortgage market run as effectively and efficiently as possible? Why are Fannie Mae and Freddie Mac often blamed for the housing crisis? What problems does the new bipartisan proposal address, and what problems does it fail to touch upon? After extensive research, it was determined that while the debate over moving forward with a public or private mortgage market is important, the problems in the mortgage market lie much deeper than that. Home buyers, the government, lending institutions, loan originators, real estate agents, investors, credit agencies, and many others have a stake in the market. It is increased accountability, responsibility, and education on behalf of each of those parties that will lead to higher effectiveness and efficiency in the mortgage market.