CREDIT RISK TRANSFER AND DE FACTO GSE REFORM.

The article deals with the use of credit risk transfer (CRT) programs to shift mortgage credit risk from U.S. government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to the private sector. It explores the efficacy of the CRT program in boosting the stability of the housing finance system. The use of CRT securities by investors in the capital market to obtain exposure to residential mortgage credit risk is discussed.