I would only add a bit more of an explanation for Barney Frank of how none of what Fannie Mae, Freddy Mac, or the Feds have done has helped make housing more affordable. In fact we can see a self-evident demonstration of how the market maintains it's equilibrium by how the price of housing went up as the cost and the availability of mortgages were tinkered with by the Feds.
Exactly! As the Fed study showed, Fanny and Freddy didn’t fulfill their mission of providing affordable housing. Fan/Fred/The Fed created very cheap money. As we know, too much money chasing too few goods causes upward price momentum that looks like it will continue in that direction. This invites speculation, miscalculation of risks, and the inevitable bubble.
This bubble has propelled house prices to stratospheric levels causing housing to be far less affordable and causing people to optimistically over-leverage themselves, become ever more creative in their financing (e.g. 50 year, interest-only, nothing down, low-doc loans - sheesh!). The median cost of a home nearly doubled in the last decade, while savings is down and household debt is up. Meanwhile, total compensation has been increasing at about 3% per year - not nearly enough to keep pace with the artificial, self-inflicted housing bubble.