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After a decade of continuous boom, since 2007 the mortgage market in the United States and all around the world has entered an economic downturn. The market is organized as a primary market and a secondary market. By 2007, there were $13.98 trillion of primary mortgages outstanding in the United States, and the secondary market was dominated by the federal government, which operated through government-sponsored enterprises (GSEs). After the sub-prime crisis, the US Federal government is considering exiting the secondary market within a period of seven to ten years. In this chapter, I discuss: (a) the primary mortgage market; (b) the secondary mortgage market; (c) mortgage- backed securities; (d) the reform of the GSEs; and (e) the future of the mortgage market after the GSEs exit.
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