FHLB housing

Mortgage market now almost entirely federal government owned

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Since the mortgage market imploded in 2007, the government has dramatically expanded its support of the housing market. You might think that the so-called recovery would change that, and the private sector would start taking some of the mortgage market back from the federal government. You would be wrong.

The FHL Banks are becoming insolvent

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Last April the Bush Administration changed the rules so that the Federal Home Loan Banks could take a more active part in propping up the housing bubble.

The looming financial difficulties have not prevented the Bush administration from expanding the F.H.A.’s role to help ease the nation’s foreclosure crisis. Since September, more than 150,000 homeowners have refinanced through F.H.A. and officials hope that the number will increase to 400,000 by the end of the year.

In doing so, the FHLB dramatically increased their share of the overall mortgage market right when the market was collapsing.

"[It's] ongoing and expensive venture into irresponsible lending and speculation - all at the taxpayer’s expense.”
- Barry Ritholtz