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How Governments Around the World Help Homeowners Enter and Remain in the Middle Class

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Many conservatives critical of the federal government’s role in mortgage markets claim that the United States is one of the only countries in the world that provides extensive government guarantees in its mortgage system. They point in particular to Europe, which does not have government guarantees for mortgage securitization analogous to those the U.S. government provides for mortgage-backed securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae, and argue that European governments don’t provide guarantees in their mortgage markets.

This argument is wrong, and in fact all European governments as well as Canada provide guarantees in their mortgage markets by guaranteeing the bank obligations that fund mortgages in these countries including bank deposits and covered bonds (also sometimes called mortgage bonds).

european governments do guarantee forms of mortgage finance

David Min is Associate Director of Financial Markets Policy at the Center for American Progress.

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