HUD Archives: News Releases

HUD No. 06-030
Antoinette Perry - Banks
(800) 328-1856
For Release
March 16, 2006


WASHINGTON - Today, the U.S. Department of Housing and Urban Development released A Study of Market Sector Overlap and Mortgage Lending. This study examines the extent of overlap between the GSEs and other mortgage market sectors (FHA, PMIs, Depositories, subprime). Overlap refers to the extent to which the different market sectors make loans with similar characteristics (e.g., similar credit history scores, similar loan-to-value (LTV) ratios, etc.).

The study developed a unique database - Home Mortgage Disclosure Act (HMDA) data supplemented with Experian data to determine credit history scores and LTV ratios. The study uses data from eleven large metropolitan areas during the years 1998-2000 to examine the extent of market overlap. This report compares the characteristics of GSE-purchased loans with mortgages originated or insured by other sectors of the mortgage market, including the FHA. This "overlap" analysis clarifies the role of the GSEs in providing credit support for low-income and minority families.

The study shows that Fannie Mae and Freddie Mac (Government-Sponsored Enterprises, or GSEs) largely serve a distinct segment of the housing market relative to, for example, the Federal Housing Administration (FHA). Compared to GSE-purchased loans, FHA-insured loans are characterized by lower down payments and borrowers with lower credit scores, and they are more strongly targeted to lower-income and minority borrowers. The study also shows that there is some overlap between markets. It finds that about 10 percent of FHA loans have risk characteristics similar to loans purchased by the GSEs.

The study can be found on the HUD website.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and


Content Archived: May 06, 2010