How The Great Recession Has Affected Mortgage Securitization, Servicing, And Homeownership

The house price bubble and the financial crisis exposed significant weaknesses in mortgage underwriting, the packaging of mortgage-backed securities (MBS), and the mortgage servicing industry. Over the course of the Great Recession and slow financial recovery, numerous corrective measures ensued, including relief for homeowners underwater on their mortgages and at risk of foreclosure, the voluminous 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, and subsequent rulemaking on new standards for mortgage underwriting and servicing. As the so-called government-sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—return to profitability and make significant repayments and dividend payments to the federal government, there is still significant controversy over the housing finance structure that will eventually replace them, as well as uncertainty over the market share private-label MBS will regain.