Sean M. Hoskins
Analyst in Financial
The bursting of the
housing bubble in 2006 precipitated the December 2007-June 2009 recession
and a financial panic in September 2008. With the housing market seen as a locus
for many of the economic problems that emerged, some Members of Congress propose
intervening in the housing market as a means of improving not only the housing
market itself but also the financial sector and the broader economy.
Critics are concerned that further intervention could prolong the housing
slump, delay recovery, and affect outcomes based on the government’s
preferences rather than market forces.
This report provides a brief overview of policy proposals for the large-scale
refinancing of mortgages for borrowers shut out of traditional financing
methods. An expansion of this report appears in CRS Report R42480, Reduce,
Refinance, and Rent? The Economic Incentives, Risks, and Ramifications of
Housing Market Policy Options, by Sean M. Hoskins. Contained in that report
is longer, in-depth analysis of large-scale refinance and two other frequently
discussed policy options, reducing mortgage principal for borrowers who
owe more than their homes are worth and renting out foreclosed homes.
Date of Report: June 25, 2012
Number of Pages: 8
Order Number: R42577
Document available via
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