The Changing Relationship Between Housing and Inequality, 1980–2010

Inequality in both income and wealth has grown rapidly in the United States since the 1970s. Over the same period, homeownership rates increased in step with expansionist government policies and the development of subprime and other exotic loan products, and housing affordability challenges emerged as the most prevalent housing problem for owners and renters alike. The subprime lending and foreclosure crises of the 2000s stretched households financially, threatening the traditional economic benefits of homeownership, bringing into stark relief the ways in which housing and inequality mutually influence one another, and implicating homeownership, housing affordability, and subprime lending in the widening gap between the rich and the poor. This article examines the changing roles of homeownership, housing affordability, and subprime lending in contemporary U.S. inequality by, first, describing trends in county inequality and housing characteristics and, second, modeling inequality as a function of the previous decade's housing characteristics over the period of 1980–2010. We build upon past models of county inequality by more explicitly considering causal order, place characteristics, and state and regional fixed effects. The results confirm that homeownership, affordability, and subprime lending not only reflect existing inequalities but also perpetuate those inequalities over time. Homeownership promotes equality, affordability problems undermine it, and subprime lending has the potential to ameliorate inequality in certain contexts, but these effects shift significantly over time, particularly as a result of widespread foreclosures and economic recession. Our analysis establishes the importance of housing in explaining contemporary inequality, highlights how place characteristics and causal ordering may improve county inequality models, and provides a foundation for future studies examining inequality in light of the Great Recession and the foreclosure crisis.     

Equality as a driver of inequality? Universalistic welfare,generalised creditworthiness and financialised housing markets

Abstract

Scandinavian countries are known for their universalistic welfare states, corporatist coordination, strong economic performances and egalitarian outcomes, an institutional combination often referred to as the ‘Nordic model’. However, these countries also possess volatile and increasingly vulnerable housing markets characterised by periods of sharp increases in prices and rents and some of the highest debt to income ratios in the world. The combination of a universalistic welfare state and housing market dynamics sets off a self-reinforcing process of increased stratification and re-familialisation. How did these orderly, egalitarian and welfare-oriented societies end up with housing markets that expose their citizens to increasing risk while driving inequality? The key lies in the effect the Nordic welfare state has on financialised housing markets. Successful decommodification of human lives leads to generalised creditworthiness which stimulates asset price inflation and new wealth and risk inequalities.     

Evidence and Actions on Mortgage Market Disparities: Research,Fair Lending Enforcement,and Consumer Protection

ABSTRACT

In this article, we present an overview of the research on discrimination in mortgage underwriting and pricing, the experiences of minority borrowers both prior to and during the financial crisis, and federal efforts to mitigate foreclosures during the crisis. We next discuss the history of legal cases alleging disparate treatment of minority borrowers, and recent cases alleging disparate impact in the wake of the Supreme Court’s Inclusive Communities decision. Using these discussions as a background, we examine and discuss mortgage regulations issued by the Consumer Finance Protection Bureau following the financial crisis, describe recent developments in the FinTech industry and explore the implications for fair lending policy and minority borrowers more generally. Finally, we draw conclusions and make recommendations for improving the mortgage market outcomes of minority borrowers and increasing minority borrowers’ access to credit.     

制约动产浮动抵押业务发展的若干因素分析

《物权法》第181条规定：“经当事人书面协议,企业、个体工商户、农业生产经营者可以将现有的以及将有的生产设备、原材料、半成品、产品抵押,债务人不履行到期债务或者发生当事人约定的实现抵押权的情形,债权人有权就实现抵押权时的动产优先受偿。”虽然在概念和法律基础上都已经明确的动产浮动抵押的内涵以及权责划分,但是在中国,动产浮动抵押业务的开展情况仍远远地落后欧、美以及日本等发达国家。     

Responding to the foreclosure crisis

Abstract

Regional economic downturns, speculation on skyrocketing home prices, and rampant unfair and deceptive mortgage lending practices have combined to create the perfect foreclosure storm in America. More than 2 million foreclosures are expected to occur during the next 12 to 18 months. Common to all three of these contributing factors is the reality that effective regulation of the mortgage market would have greatly limited damage from foreclosures.

This article traces the origins of the subprime market crisis and the resulting impact of foreclosures on the housing market, minority households, and the economy. The article also reviews the effectiveness of current interventions to mitigate or limit foreclosures and recommends broader solutions to help families maintain their homes.     

Outlook: The subprime lending crisis: Focus on the problem: Subprime borrowers in trouble

Abstract

Public policy should be directed at serving the large number of borrowers who have recently taken out subprime loans and who are at serious risk of losing their homes when their mortgages reset. Practicing forbearance and providing counseling for defaulting homeowners, as well as allowing them to refinance into a Federal Housing Administration loan, can be particularly helpful. Broad changes in housing programs and in the structure of the mortgage market should be considered on their merits as good or bad public policy for the long term, not simply as solutions to the subprime problem.     

Comment on Michael A. Stegman et al.’s “Preventive servicing is good for business and affordable homeownership policy”: What prevents loan modifications?

Abstract

After discussing the article by Stegman et al., this comment describes the barriers to preventive servicing for securitized residential loans and assesses the importance of loan modifications, given the recent increases in default and foreclosure rates for subprime loans. Several hurdles slow or reduce such modifications, even those that help borrowers and investors alike. For example, self‐interest may reduce servicers’ willingness to modify loans rapidly. In addition, underlying securitization agreements may impede servicers’ ability and discretion in this area. Further, tax laws that govern a common securitization entity may limit modifications, as may accounting standards. Finally, “tranche warfare,” the sometimes contradictory fiduciary duties servicers have toward investors holding different tranches of securitized pools, may decrease their ability or their willingness to modify loans.

This comment concludes that barriers to effective loan modifications should be reduced or eliminated where feasible, but that the securitization of subprime loans creates risks for borrowers.