In a timely assessment ahead of renewed GSE reform, the Federal Reserve has released a new staff paper sharply questioning the value of a USG guarantee as a means of enhancing sustainable home ownership.  As we noted in earlier reports, here and here, research last week from the Federal Reserve Bank of New York challenged FHA’s benefits for first-time homeowners; this new study goes farther by under-cutting the necessity of any USG guarantee at all.  However, we question its conforming-loan limit methodology, which we think is suited only to analysis of whether new FHFA Director Calabria could really reduce the limits to levels as low as conservatives have long espoused.

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