Email: tsur.somerville@sauder.ubc.ca Introduction Many have laid the dramatic downturn in the world economy over the past year at the feet of excess in housing markets, and in particular the US housing market.1. [...] In the housing market, the role of government, is inescapable, with the takeover by the US government of US secondary mortgage market giants Fannie Mae and Freddie Mac underscores the close relationship between government policy and the operation of housing markets.2. [...] The objective of this report is to evaluate the federal government’s involvement in the housing market through the National Housing Act (NHA) and the Canada Mortgage and Housing Corporation (CMHC). [...] The reduction in capital requirements awarded with insurance could vary with the degree of protection and the riskiness of the loan, creating a more sophisticated and flexible system than the current mandatory insurance with pricing for insurance tied to LTV alone. [...] Instead the major changes have been the growth of lending by the major banks, principally as they absorbed the trusts, and the domination of the securitized mortgage market by loans insured under the NHA.