In 2011, the Government Mortgage Complex accounted for 88 percent of all first-mortgage originations in the United States, with the government also controlling an estimated 90 percent of the student loan market. The government’s growing dominance in the home mortgage and student loan categories is cause for concern, posing a threat to private investors, borrowers, and taxpayers.

The mortgage meltdown and ensuing financial crisis were the result of an unprecedented accumulation of weak and risky Non-Traditional Mortgages (NTMs). By mid-2008 about one-half of outstanding all loans were NTMs. The early 1990s is the appropriate benchmark since shortly thereafter government policies required the broad-based introduction of “flexible underwriting standards.”

In the latest Financial Services Outlook, American Enterprise Institute (AEI) housing experts Peter Wallison and Edward Pinto explain how decades of government intervention have gravely harmed America's housing market.

How did the financial system accumulate an unprecedented number of risky mortgages?

As the housing market struggles to keep pace with economic recovery elsewhere, homeowners would love to have a crystal ball.  Absent that, however, they have AEI resident fellow Edward Pinto, one of seven panelists to be awarded with Zillow and Pulsenomics' Crystal Ball Award.

As policymakers continue their efforts to reduce the government’s role in the currently nationalized housing market, the broadly available and deep subsidies provided to the five divisions of the Government Mortgage Complex continue to distort the marketplace and thwart these efforts.

Online registration for this event is closed. Walk-in registrations will be accepted. Despite the recent drop in house prices, too much of America's housing remains unaffordable to the ordinary homebuyer. While genuine poverty accounts for some of the problem, even middle-class Americans--especially along the country’s east and...

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