Fannie Mae and Freddie Mac are two government-sponsored enterprises that received significant attention for their role in the 2007 mortgage crisis. These agencies must fulfill goals laid out by the Department of Housing and Urban Development that are intended to increase homeownership among borrowers who are traditionally underserved by the mortgage market. In this paper I test the hypothesis that affordable housing goals increase the availability of credit to targeted borrowers. These borrowers would usually not receive a mortgage because they are not as profitable as less risky borrowers. To test the impact of affordable housing goals I develop a theoretical model that explains the contributing factors in the decision to lend and how GSE activity impacts this decision. To determine the impact of affordable housing goals on the lending decision a regression model is conceptualized and estimated using tract level aggregate data. My findings show signs that GSE purchases reduce the denial rate in low-income tracts targeted by affordable housing goals. The result of this is greater access to credit for targeted borrowers.


Burnell, James



Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



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