Do the GSEs matter to low-income housing markets? An assessment of the effects of the GSE loan purchase goals on California housing outcomes

This study evaluates the effects of the GSE mortgage purchase goals on homeownership and housing conditions among communities that are the focus of the 1992 GSE Act and the HUD affordable housing goals. To identify GSE effects, the test framework exploits differences in the definition of lower-income and underserved neighborhoods under the 1992 GSE Act, which specifies loan purchase goals for the GSEs, and the 1977 Community Reinvestment Act, which governs loan origination activity among the federally-insured depository institutions. Research finding suggest little efficacy of the GSE home loan purchase goals in elevating the homeownership and housing conditions of targeted and underserved neighborhoods, in turn suggesting the importance of ongoing federal policy focus in achievement of affordable housing objectives.