CRS Issue Statement on Mortgage Markets and Regulation

Edward V. Murphy, Coordinator
Specialist in Financial Economics

Mortgage markets raise a number of issues of congressional concern, including consumer protection, bank safety and soundness, market liquidity, and systemic risk. Mortgage markets are the central mechanism for facilitating home ownership and for providing collateral for the loans of many thrifts and commercial banks. The financial regulators, including the Federal Reserve, the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, are of continuing interest to Congress because of Congress's oversight role and the large amount of constituent mail devoted to the subject. Mortgage market practices such as underwriting standards, appraisal guidelines, and other issues can be influenced by the willingness of other institutions to fund mortgage lenders, including government-sponsored enterprises, investors in mortgage-related securities, and covered bonds. The ability of mortgage originators to shift risk to secondary institutions might indirectly influence the protection of consumers in mortgage markets, whether due to reduced safeguards against predatory lending or due to negligent underwriting.


Date of Report: January 21, 2010
Number of Pages: 3
Order Number: IS40352
Price: $7.95

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