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This article analyzes the role of the Federal National Mortgage Association (FNMA) in the mortgage market on housing and mortgage credit cycles, and discusses the debate about whether the FNMA moderates housing and mortgage credit cycles since the organization was privatized. The author reviews in an econometric fashion the role that the FNMA has played, and its future role when there is increased financial deregulation. Defenders of the FNMA have argued that the organization provides mortgage credit, thus moderating housing cycles by making mortgage funds available. But with increased financial deregulation, FNMA's critics argue that it does not moderate housing cycles.

The article focuses on auction results of the U.S. Federal National Mortgage Association (FNMA) four month commitments to purchase mortgage loans in 1980. It states that the belief that FNMA auction results are a good forecasting tool of future mortgage rates is inaccurate. It mentions that the Box-Jenkins procedure is a useful methodology for forecasting when the forecast period isn't extended overly. It suggests that if the average auction yield was available for all bids, rather than just successful bids, then the FNMA auction results might be a more accurate forecasting tool.

The article discusses the behavior of federal mortgage market agencies in the U.S. Agency financing in the U.S. is endogenous with timing being important as the agencies may be asked to assist in the mortgage market during periods of stringent credit. This means that most of their financing occurs during these periods and their reactionary to market conditions. Also, interest rates are affected by the credit stringency because the government financing agencies have to borrow in order to provide assistance.

The article focuses on the recommendations of the Hunt Commission Report, named after its author Reed O. Hunt, and created to determine and control the U.S. money supply, examining the role of the money multiplier as the framework for assessing the Hunt Commission findings, and considering the policy implications of the Hunt Commission in relation to the U.S. money supply. The author breaks down all the recommendations of the Hunt Commission Report and considers their effectiveness. An example is the directive that all thrift institutions be allowed to offer third-party facilities that the author concludes would have the effect of increasing the elasticity of excess bank reserves.