Experts from the US, Europe, Canada, and Asia will address efforts to moderate housing cycles using countercyclical lending policies.

The Corker-Warner bill does a creditable job—certainly the best of any current proposal for a government-backed system—in insulating the taxpayers from risk. But Congress has to face the fact, made plain by what happened with Fannie Mae and Freddie Mac that any plan in which the government covers "catastrophic losses" is fatally flawed.

Examples of Successful Housing Finance Models without Explicit Government Guarantees

The WSJ reported today (Tuesday, June 4) that the FHA had conducted a previously undisclosed stress test which found FHA losses could hit $115 billion under the Federal Reserve bank stress test.

The biggest question with the $10 trillion U.S. housing finance sector is what to do with the government-sponsored enterprises that have recently attained even greater monopoly power. Here’s a way to move beyond the political stalemate.

The housing market is finally recovering from the six-year bust triggered by massive over-leveraging induced by bubble prices. To confront future over-leveraging now, we need to implement a counter-cyclical bubble controller.

In another example of the Federal Housing Administration’s (FHA’s) mission failure, the redefault rate after 12 months on government-guaranteed modifications (government mods) hovers around 40 percent for loans modified in 2010, 2011, and 2012. This is yet another example of the nightmare at FHA—policies that promote a cycle of failure for working-class families.

As wards of the government, Fannie and Freddie became even more dominant in the mortgage market than they had been before. Almost everybody agrees that they should neither stay in government conservatorship nor return to their former GSE status. But how do we get off the tiger?

Bringing private capital back to fund mortgages and take on credit risk is an essential element of housing finance reform, particularly with respect to reform of the government-sponsored enterprises (GSEs) of Fannie Mae and Freddie Mac.