10 Additional mortgage initiatives Additional government policies can help address problems in the mortgage markets. The Congress can take an important step by moving quickly to reconcile and enact legislation permitting the Federal Housing Administration (FHA) to increase its scale and improve its management of risks.
The rise in house prices contributed to an increase in credit availability, and the bursting of the bubble, by affecting financial intermediaries as well as households, had larger adverse effects than anticipated. Lower house prices caused the prices of mortgage-related securities to decline, which weakened the balance sheets of a broad array of financial institutions.