Index
A
adjustable-rate mortgages, 71, 75, 85
affordability, preserving, 152
Americanism, 16
ARMs. See adjustable-rate mortgages
B
bad-debt deduction, history of, 35
banks
commercial banks, 26
Federal Home Loan Bank System, 32, 50
mutual savings banks, 26
national institutions, 28
nonfarm residential mortgage holdings, by type of institution (1900-2010), 30
savings and loan associations
during Great Depression, 31-33
Federal Savings and Loan Insurance Corporation (FSLIC), 33
first hundred years (1830-1930), 25-31
founding of, 9
postwar growth and diversification, 33-36
shifting of interest-rate risk to borrowers, 70-71
Bauhaus movement, 3
Beijing, China housing prices, 117
below-market interest rate (BMIR) mortgage insurance, 55
BMIR (below-market interest rate) mortgage insurance, 55
bonds
covered bonds, 95
housing bonds, 156
mortgage covered bonds
mortgage covered bond use in countries over time, 10-11
as percent of nominal GDP, 13
as percent of residential loans outstanding, 13
Brazil
mortgage market characteristics, 113
source of funding for home mortgages, 107
Brownstein, Phillip, 55
building societies. See savings and loan institutions
C
Canada
Canada Mortgage and Housing Corporation, 40
government involvement in the housing market, 97-101
home mortgage debt outstanding by type of holder, 98
homeownership rates, 96
home prices, 96
housing problems in U.S. versus Canada, 95-101
mortgage financing, 100
positive equity in, 101
residential delinquency rates, 97
securitization in, 98
Canada Mortgage and Housing Corporation, 40
CAPC (Community Asset Preservation Corporation), 149
capital
flexible capital structure, importance of, 174-176
CBs. See commercial banks
CDOs (collateralized debt obligations), 75
Chile
mortgage market characteristics, 113
source of funding for home mortgages, 107
dangers to economy from housing bubble, 134-136
demand factors in real estate market, 134
history of housing provision in (1949 to present), 119-122
housing price-to-income ratio values, 122-127
land use, 131
mortgage market characteristics, 113
property market-related policies, 128-129
source of funding for home mortgages, 107
state-owned enterprises (SOEs), 134
supply factors in real estate market, 130-133
clearing property logjam, 150
CMHC (Canada Mortgage and Housing Corporation), 40
collateralized debt obligations (CDOs), 75
commercial banks, 26
Community Asset Preservation Corporation (CAPC), 149
Community Reinvestment Act (CRA), 59-60
covered bonds, 95
CRA (Community Reinvestment Act), 59-60
“cream skimming,” 44
credit analysis, importance of, 173-174
credit enhancement, 157
Croatia
mortgage market characteristics, 113
source of funding for home mortgages, 107
mortgage market characteristics, 113
source of funding for home mortgages, 107
D
decline in home prices, 78
demand factors in Chinese real estate market, 134
demand for shelter capital, 1-2
Demonstration Cities and Metropolitan Development Act, 56
Denmark, use of covered bonds in, 95
de Soto, Hernando, 174
developing countries, housing in, 153-154
distribution of prime and subprime mortgage originations by FICO score, 79
E
Edison, Thomas, 3
EEMs (energy-efficient mortgages), 161-162
Emergency Homeowner’s Loan Program, 63
emerging markets
dangers to economy from housing bubble, 134-136
demand factors in real estate market, 134
history of housing provision in (1949 to present), 119-122
housing price-to-income ratio values, 122-127
land use, 131
property market-related policies, 128-129
state-owned enterprises (SOEs), 134
supply factors in real estate market, 130-133
depth of mortgage markets in different countries, 103-105
mortgage market characteristics in emerging and newly industrialized economies, 113-116
source of funding for mortgages in emerging and newly industrialized economies, 107-114
energy efficiencies, financing, 159-161
energy-efficient mortgages (EEMs), 161-162
entailed property, 7
environmental efficiencies, financing, 159-161
Equal Credit Opportunity Act of 1974, 59
European Union countries
depth of mortgage markets in different countries, 103-105
government mortgage market support, 39
homeownership rates in, 21-22, 92-93
house price changes in selected countries, 90-92
mortgage debt-to-GDP ratios, 94
ratio of home mortgage debt to GDP by country, 23-24
sources of funding for home mortgages in selected countries, 2009, 31
F
Fair Housing Act (Title VIII), 59
Fannie Mae. See Federal National Mortgage Association (FNMA)
FDIC (Federal Deposit Insurance Corporation), 33
Federal Deposit Insurance Corporation (FDIC), 33
federal government (U.S.)
government involvement in the housing market, 97-101
GSEs (Government-Sponsored Enterprises), 48
legislation. See legislation
mortgage market support, 37-40
policies to address inner-city housing problems, 54-58
regulation of conventional mortgage lenders, 58-60
Federal Home Loan Bank Act, 32, 50
Federal Home Loan Bank Board (FHLBB), 26, 32
Federal Home Loan Banks (FHLB), 32, 48, 50
Federal Home Loan (FHL) banks, 32
Federal Home Loan Mortgage Corporation (FHLMC), 50, 49
Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 50
Federal National Mortgage Association (FNMA), 42, 48
Federal National Mortgage Charter Act of 1954, 54
Federal Savings and Loan Insurance Corporation (FSLIC), 33
FHLBB (Federal Home Loan Bank Board), 26, 32
FHLB (Federal Home Loan Banks), 32, 48, 50
FHLMC (Federal Home Loan Mortgage Corporation), 49-50
financial innovation in housing, 139-140
foreclosure crisis, resolving
clearing property logjam, 150
credit enhancement, 157
EEMs (energy-efficiency mortgages), 161-162
energy and environmental efficiencies, financing, 159-161
housing bonds, 156
housing in developing countries, 153-154
innovative pricing models, 149-150
land trusts, 155
preserving affordability, 152
property tax-based financing, 164-170
sustainable financial innovation, 157-159
unsecured home improvement loans, 162-163
innovative pricing models, 149-150
people- versus place-based subsidies, 143-144
post-crisis housing markets, 140-141
restoration of partnership with private investors, 145-146
securitizations/structured finance products, 147-148
structural shifts in housing demand, 141-142
supply-side housing innovations, 144
technology and financial innovation, 145
credit analysis, importance of, 173-174
flexible capital structure, importance of, 174-176
early shelter and financing, 2-3
first housing finance innovations, 4-8
industrial revolution and housing finance, 8-17
mortgage covered bond use in countries over time, 10-11
mortgage covered bonds
mortgage covered bond use in countries over time, 10-11
as percent of nominal GDP, 13
as percent of residential loans outstanding, 13
mortgages. See mortgages
savings and loan institutions. See savings and loan associations
flexible capital structure, importance of, 174-176
FNMA (Federal National Mortgage Association), 42, 48
foreclosure crisis, resolving, 148-149
clearing property logjam, 150
credit enhancement, 157
EEMs (energy-efficiency mortgages), 161-162
energy efficiency, financing, 159-161
housing bonds, 156
innovative pricing models, 149-150
land trusts, 155
preserving affordability, 152
property tax-based financing, 164-170
sustainable financial innovation, 157-159
unsecured home improvement loans, 162-163
foreclosure rates, 77-81, 87-90
France
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
Freddie Mac. See FHLMC (Federal Home Loan Mortgage Corporation)
Frederick the Great, 9
Freeman, Daniel, 17
FSLIC (Federal Savings and Loan Insurance Corporation), 33
Fuller, Buckminster, 3
future innovations. See financial innovation in housing
G
Garn–St. Germain Depository Institutions Act of 1982, 26
GDP (gross domestic product), ratio of home mortgage debt to GDP by country, 23-24
Germany
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
Ginnie Mae, 49
global housing crisis. See housing crisis
GNMA (Government National Mortgage Association), 49, 65, 72
Government National Mortgage Association (GNMA), 49, 65, 72
Government-Sponsored Enterprises (GSEs), 48
Greece
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
Gropius, Walter, 3
GSEs (Government-Sponsored Enterprises), 48
Guanzhou, China housing prices, 118
H
HELP (Home Energy Loan Program), 163
history of housing
early shelter and financing, 2-3
first housing finance innovations, 4-8
industrial revolution and housing finance, 8-17
mortgage covered bond use in countries over time, 10-11
timeline of developments in housing and mortgages, 5-6
savings and loan associations
during Great Depression, 31-33
first hundred years (1830-1930), 25-31
postwar growth and diversification, 33-36
HOLC (Home Owner’s Loan Corporation), 41, 175
Home Affordable Modification Program, 63
Home Energy Loan Program (HELP), 163
home improvement loans, 162-163
Home Mortgage Disclosure Act of 1975, 59
homeownership, 21-24. See also mortgages
Canada versus U.S., 96
homeownership rates
in 2004, 70
nonfarm residential mortgage holdings, by type of institution (1900-2010), 30
ratio of home mortgage debt to GDP by country, 23-24
shared-equity ownership, 152
U.S. versus European Union countries, 21-22
Home Owners’ Loan Act, 32
Home Owner’s Loan Corporation (HOLC), 41, 175
Hoover, Herbert, 32
horoi, 4
housing. See also financing; mortgages
demand for shelter capital, 1-2
federal housing initiatives, 38-40
federal policies to address inner-city housing problems, 54-58
financial innovation in housing, 139-140
clearing property logjam, 150
credit enhancement, 157
EEMs (energy-efficiency mortgages), 161-162
energy and environmental efficiencies, financing, 159-161
housing bonds, 156
housing in developing countries, 153-154
innovative pricing models, 149-150
land trusts, 155
people- versus place-based subsidies, 143-144
preserving affordability, 152
property tax-based financing, 164-170
restoration of partnership with private investors, 145-146
securitizations/structured finance products, 147-148
structural shifts in housing demand, 141-142
supply-side housing innovations, 144
sustainable financial innovation, 157-159
technology and financial innovation, 145
unsecured home improvement loans, 162-163
foreclosure crisis, resolving, 148-149
clearing property logjam, 150
credit enhancement, 157
EEMs (energy-efficiency mortgages), 161-162
energy and environmental efficiencies, financing, 159-161
housing bonds, 156
housing in developing countries, 153-154
innovative pricing models, 149-150
land trusts, 155
preserving affordability, 152
sustainable financial innovation, 157-159
unsecured home improvement loans, 162-163
GSEs (Government-Sponsored Enterprises), 48
history of
early shelter and financing, 2-3
first housing finance innovations, 4-8
industrial revolution and housing finance, 8-17
mortgage covered bond use in countries over time, 10-11
timeline of developments in housing and mortgage, 5-7
homeownership, 21-24. See also mortgages
Canada versus U.S., 96
homeownership rates, 70, 92-93
nonfarm residential mortgage holdings, by type of institution (1900-2010), 30
ratio of home mortgage debt to GDP by country, 23-24
shared-equity ownership, 152
U.S. versus European Union countries, 21-22
house price changes in selected countries, 90-92
post-crisis housing markets, 140-141
structural shifts in housing demand, 141-142
Housing Act of 1961, 55
Housing and Community Development Act of 1974, 43
Housing and Urban Development Act of 1968, 56, 62
housing bonds, 156
demand for shelter capital, 1-2
homeownership rates for selected countries, 92-93
house price changes in selected countries, 90-92
importance of credit analysis, 173-174
need for flexible capital structure, 174-176
rethinking size of housing, 176-177
value of structured products and secondary markets, 177-178
mortgage debt-to-GDP ratios for selected countries, 94
adjustable-rate mortgages, 75, 85
CDOs (collateralized debt obligations), 75
changes in borrowers’ financial circumstances, 80-82
decline in home prices, 78
distribution of prime and subprime mortgage originations by FICO score, 79
foreclosure rates, 77-81, 87-90
home mortgage debt outstanding by type of holder, 99
homeownership rates, 2004, 70
housing problems in U.S. versus Canada, 95-101
loan-to-value (LTV) ratio, 83
MBSs (mortgage-backed securities), 75
prime mortgage originations, 80, 87
residential delinquency rates, 97
shifting of interest-rate risk to borrowers, 70-71
subprime mortgage market meltdown, 71-78
subprime mortgage originations, 80, 88
housing price-to-income ratio values in China, 122-127
housing provision in China (1949 to present), 119-122
Hungary
mortgage market characteristics, 113
source of funding for home mortgages, 108
I
India
mortgage market characteristics, 113
source of funding for home mortgages, 107-111
Indonesia
mortgage market characteristics, 113
source of funding for home mortgages, 108
industrial revolution and housing finance, 8-17
inner-city housing problems, federal policies for, 54-58
innovations. See financial innovation in housing
insurance, mortgage insurance
BMIR (below-market interest rate) mortgage insurance, 55
development and impact of, 40-47
SRIF (Special Risk Insurance Fund), 56
Interest Rate Control Act of 1966, 35
Ireland
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
Italy
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
J-K-L
Jefferson, Thomas, 15
Land Act of 1796, 16
Land Administration Law (China), 120
Land Ordinance of 1785, 16
land-transfer fees (China), 132-133
land trusts, 155
land-use planning, 144
China versus U.S., 120-122, 131
Lasch, Christopher, 16
lease-to-purchase mortgages., 152
Community Reinvestment Act of 1977, 59
Demonstration Cities and Metropolitan Development Act, 56
Equal Credit Opportunity Act of 1974, 59
Fair Housing Act (Title VIII), 59
Federal Home Loan Bank Act, 32, 50
Federal Housing Enterprises Financial Safety and Soundness Act of 1992, 50
Federal National Mortgage Charter Act of 1954, 54
Garn–St. Germain Depository Institutions Act of 1982, 26
Home Mortgage Disclosure Act of 1975, 59
Home Owners’ Loan Act, 32
Housing Act of 1961, 55
Housing and Community Development Act of 1974, 43
Housing and Urban Development Act of 1968, 56, 62
Interest Rate Control Act of 1966, 35
Land Act of 1796, 16
Land Ordinance of 1785, 16
National Banking Act in 1863, 37
National Housing Act of 1934, 41
National Housing Act of 1949, 54
Omnibus Housing Act of 1954, 54
Preemption Act of 1841, 16
Revenue Act of 1951, 35
Revenue Act of 1962, 35
Riegle-Neal Interstate Banking and Branching Efficiency Act, 63
Tax Equity and Fiscal Responsibility Act of 1982, 35
Tax Reform Act of 1969, 35
Tax Reform Act of 1986, 35
Wilson Tariff Act, 9
lessons of housing crisis, 171-173
need for flexible capital structure, 174-176
rethinking size of housing, 176-177
value of structured products and secondary markets, 177-178
liberalization of mortgage terms, 54
Lincoln, Abraham, 17
loan-to-value (LTV) ratio, 83
M
Malaysia, mortgage market characteristics, 113
MBSs (mortgage-backed securities), 75
McMansion trend, 176
Mexico, mortgage market characteristics, 113
Milken Institute, xii
Millennium Development goals (UN), 1
MMIF (Mutual Mortgage Insurance Fund), 41
money market mutual funds, development of, 34
mortgage-backed securities (MBSs), 75
mortgage brokerages, 74
mortgage debt-to-GDP ratios for selected countries, 94
mortgage insurance
BMIR (below-market interest rate) mortgage insurance, 55
development and impact of, 40-47
SRIF (Special Risk Insurance Fund), 56
adjustable-rate mortgages, 71, 75, 85
changes in borrowers’ financial circumstances, 80-82
credit analysis, importance of, 173-174
depth of mortgage markets in different countries, 103-105
distribution of prime and subprime mortgage originations by FICO score, 79
EEMs (energy-efficiency mortgages), 161-162
flexible capital structure, importance of, 174-176
government mortgage market support, 37-40
government regulation of conventional mortgage lenders, 58-60
history of
first housing finance innovations, 4-8
industrial revolution and housing finance, 8-17
mortgage covered bond use in countries over time, 10-11
timeline of developments in housing and mortgage, 5-7
lease-to-purchase mortgages., 152
liberalization of mortgage terms, 54
loan-to-value (LTV) ratio, 83
MBSs (mortgage-backed securities), 75
mortgage-backed securitization timeline, 53
mortgage brokerages, 74
mortgage covered bonds
as percent of nominal GDP, 13
as percent of residential loans outstanding, 13
timeline of bond use in countries over time, 10-11
mortgage debt-to-GDP ratios for selected countries, 94
mortgage insurance
BMIR (below-market interest rate) mortgage insurance, 55
development and impact of, 40-47
SRIF (Special Risk Insurance Fund), 56
mortgage market characteristics in emerging and newly industrialized economies, 112-115
nonfarm residential mortgage holdings, by type of institution (1900-2010), 30
ratio of home mortgage debt to GDP by country, 23-24
reverse mortgages, 5
Section 203(b) mortgages, 42-43
source of funding for mortgages in emerging and newly industrialized economies, 107-114
sources of funding for home mortgages in selected countries, 2009, 31
subprime mortgages
subprime mortgage market meltdown, 71-78
subprime mortgage originations, 80, 88
variable-rate mortgages, history of, 35
mortgage stones, 4
MSBs. See mutual savings banks
mutual funds, money market mutual funds, 34
Mutual Mortgage Insurance Fund (MMIF), 41
mutual savings banks, 26
N
NACA (Neighborhood Assistance Corporation of America), 151
National Banking Act in 1863, 37
National Community Stabilization Trust (NCST), 149
National Housing Act of 1934, 41
National Housing Act of 1949, 54
national institutions, 28
NCST (National Community Stabilization Trust), 149
Neighborhood Assistance
Corporation of America (NACA), 151
Neighborhood Stabilization Program, 150
Netherlands
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
newly industrialized nations
depth of mortgage markets, 103-105
mortgage market characteristics in emerging and newly industrialized economies, 113-116
source of funding for mortgages in emerging and newly industrialized economies, 107-114
nonfarm residential mortgage holdings, by type of institution (1900-2010), 30
O
Omnibus Housing Act of 1954, 54
origination of mortgages, 72-73
Oxford Provident Building Association, 25
P
people- versus place-based subsidies, 143-144
PMI (private mortgage insurance), 43-44
Poland, mortgage market characteristics, 113
Portugal
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
post-crisis housing markets, 140-141
PPP (purchasing power parity), 115
Preemption Act of 1841, 16
preserving affordability, 152
pricing
innovative pricing models, 149-150
prime mortgage foreclosures, 87
prime mortgage originations, 80, 87
PRIs (program-related investments), 151
private investors, restoring partnership with, 145-146
private mortgage insurance (PMI), 43-44
program-related investments (PRIs), 151
property logjam, clearing, 150
property rights, importance of, 174
property tax-based financing, 164-170
purchasing power parity (PPP), 115
R
Recovery Through Retrofit plan, 165
regulation of conventional mortgage lenders, 58-60
residential delinquency rates, U.S. versus Canada, 97
restoration of partnership with private investors, 145-146
rethinking size of housing, 176-177
Revenue Act of 1951, 35
Revenue Act of 1962, 35
reverse mortgages, 5
Riegle-Neal Interstate Banking and Branching Efficiency Act, 63
Russia
mortgage market characteristics, 113
source of funding for home mortgages, 110
S
founding of, 9
FSLIC (Federal Savings and Loan Insurance Corporation), 33
history of
first hundred years (1830-1930), 25-31
founding of, 8
postwar growth and diversification, 33-36
national institutions, 28
nonfarm residential mortgage holdings, by type of institution (1900-2010), 30
shifting of interest-rate risk to borrowers, 70-71
U.S. League of Local Building and Loan Associations, 28
secondary markets, value of, 177-178
Section 203(b) mortgages, 41-45, 56-59
mortgage-backed securitization timeline, 53
U.S. versus Canada, 98
Self-Help, 152
Shanghai, China housing prices, 117
shared-equity ownership, 152
Shenzhen, China housing prices, 118
Singapore
mortgage market characteristics, 115
source of funding for home mortgages, 110
size of housing, rethinking, 176-177
S&L associations. See savings and loan associations
The Snail House, 116
SOEs (state-owned enterprises), 120, 134
South Africa
mortgage market characteristics, 115
source of funding for home mortgages, 110
South Korea
mortgage market characteristics, 115
source of funding for home mortgages, 111
Spain
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
Special Risk Insurance Fund (SRIF), 56
SRIF (Special Risk Insurance Fund), 56
State Budgetary Funding (China), 119
state-owned enterprises (SOEs), 120, 134
structural shifts in housing demand, 141-142
structured finance products
subprime mortgages
distribution of prime and subprime mortgage originations by FICO score, 79
subprime mortgage market meltdown, 71-78
subprime mortgage originations, 80, 88
subsidies, people- versus place-based, 143-144
Summers, Lawrence, 83
supply factors in Chinese real estate market, 130-133
side-side housing innovations, 144
sustainable financial innovation, 157-159
T
Taiwan, mortgage market characteristics, 115
Tax Equity and Fiscal Responsibility Act of 1982, 35
Tax Reform Act of 1969, 35
Tax Reform Act of 1986, 35
TDR (transfer of development rights), 144
technology and financial innovation, 145
mortgage market characteristics, 115
source of funding for home mortgages, 111
timelines
developments in housing and mortgages, 5-7
mortgage-backed securitization, 53
mortgage covered bond use in countries over time, 10-11
Title IV, National Housing Act, 33
transfer of development rights (TDR), 144
U
UN. See United Nations
United Kingdom
homeownership rates, 93
mortgage debt-to-GDP ratios, 94
United Nations, Millennium Development goals, 1
unsecured home improvement loans, 162-163
adjustable-rate mortgages, 75, 85
CDOs (collateralized debt obligations), 75
changes in borrowers’ financial circumstances, 80-82
decline in home prices, 78
distribution of prime and subprime mortgage originations by FICO score, 79
foreclosure rates, 77-81, 87-90
home mortgage debt outstanding by type of holder, 99
homeownership rates, 21-22, 70, 93
housing problems in U.S. versus Canada, 95-101
loan-to-value (LTV) ratio, 83
MBSs (mortgage-backed securities), 75
mortgage debt-to-GDP ratios, 94
prime mortgage originations, 80, 87
ratio of home mortgage debt to GDP, 23-24
residential delinquency rates, 97
shifting of interest-rate risk to borrowers, 70-71
subprime mortgage market meltdown, 71-78
subprime mortgage originations, 80, 88
U.S. League of Local Building and Loan Associations, 28
V-W-X-Y-Z
variable-rate mortgages, history of, 35
Wilson Tariff Act, 9
Wood, John, 8
zoning, 144