The potential and limitations of mortgage innovation in fostering homeownership in the United States

Abstract

This article presents an empirical analysis of mortgage innovation as a vehicle to enable renters, especially those from traditionally underserved populations, to realize home‐ownership. It examines the financial and underwriting criteria of a typology of mortgage products, from those adhering to historical standards to some of today's most liberal loans, and develops synthetic models to account for all direct purchase costs. These models are calibrated using 1995 data on renter demographic and financial characteristics from the Survey of Income and Program Participation.

Compared with historical mortgages, today's more innovative loans increase the number of renters who could hypothetically qualify for homeownership by at least a million and expand potential home‐buying capacity by $300 billion. Certain policies could greatly expand the potential gains. Nevertheless, even the most aggressive innovations can play only a limited role in efforts to deliver the material benefits of homeownership to underserved populations.     

Asian Americans for equality: A case study of strategies for expanding immigrant homeownership

Abstract

At a time when the overall homeownership rate in the United States is at a historic high, many groups still face severe hurdles in realizing the American dream. The public, private, and nonprofit sectors are working to address these barriers, and this article examines one nonprofit's activities. Asian Americans for Equality (AAFE) is a civil rights and housing organization providing homeownership and other services to Asian Americans, a group that often faces language, cultural, credit, and financial difficulties in achieving homeownership.

AAFE addresses these challenges by providing aggressive outreach through housing fairs and neighborhood publications; it offers homeownership education and counseling in a variety of languages and settings, secures multiple housing subsidies and develops affordable housing, and educates lenders on the employment and credit practices of the Asian community. AAFE thus helps tailor the complex web of activities required to expand homeownership to traditionally underserved—especially immigrant—populations.     

Policy incentives and the extension of mortgage credit: Increasing market discipline for subprime lending

The lax underwriting in non‐prime mortgage markets is widely perceived as one cause of the recent difficulties in the housing market. Policymakers are currently considering moves such as enforcing more careful underwriting to provide additional discipline to mortgage markets. This research explores the possibility of another approach to supplement or replace some of these efforts, namely the use of policy to create incentives for Fannie Mae and Freddie Mac (together, the GSEs) to help “check” behavior in non‐prime markets. The hypothesis is that the GSE Act affordable housing goals have increased GSE focus on targeted loan purchases, which in turn has led prime market lenders to compete more aggressively for borrowers on the margin between prime and subprime credit quality. As a consequence, these marginal borrowers will be more inclined to take prime mortgages rather than higher‐cost subprime loans. We test this hypothesis and find empirical support for it. We observe a negative relationship between the growth in GSE market share and the growth in subprime market share over time, and find that the impact of the GSEs on subprime lending tends to be stronger in high‐minority neighborhoods, where subprime lending has been concentrated and growing the fastest. Simulations show that a 10 percent increase in GSE market share (for example, from 20 to 22 percent) can cause 45,000 borrowers using prime instead of subprime loans a cost savings of about $1.7 billion. These results suggest that the GSEs, regardless of their postconservatorship form, should continue to devote attention to serving underserved populations and suggest that significant welfare benefits will accrue. © 2009 by the Association for Public Policy Analysis and Management.     

Islands of decay in seas of renewal: Housing policy and the resurgence of gentrification

Abstract

For many observers, the recession of the early 1990s signaled the end of what Berry called islands of renewal in seas of decay. In the past decade, however, shifts in mortgage finance have intersected with developments in assisted housing to alter the links between gentrification and housing policy. In this article, we use field observation, Home Mortgage Disclosure Act data, and HOPE VI plans to analyze the resurgence of gentrification in eight U.S. cities.

Between 1992 and 1997, gentrified neighborhoods attracted conventional homepurchase mortgage capital at a rate that grew at more than 2.3 times the suburban rate. Logit models confirm that mortgage capital favors gentrified neighborhoods even after controlling for applicant and loan characteristics, suggesting a new relationship between mortgage lending and neighborhood change. In some cities, gentrification has surrounded islands of decay and poverty with landscapes of renewal     

Hu Jintao and the CCP’s ideology: A historical perspective

The role of ideology in Chinese politics has experienced dramatic changes in the past six decades. Mao Zedong had tremendous power over the political institutions of the Chinese Communist Party (CCP). During the Cultural Revolution, he mobilized the masses against the Party’s institutions in the name of Mao Zedong Thought. Deng Xiaoping significantly downplayed the role of ideology in politics by trying to avoid theoretical debates. Jiang Zemin invented a new thought, “Three Represents,” yet the thought was detached from his name when it was enshrined in the CCP Constitution. Most recently, as a result of the political succession at the Sixteenth National Congress of the CCP, Jiang is no longer the most authoritative interpreter of the thought. Now it is Hu Jintao, new General Secretary of the CCP, who has become the official interpreter of the thought. He offered a new interpretation in his July 1^st speech on the “Three Represents” in 2003. It seems that ideology is no longer a personal trademark. It has become an asset of the Party and been institutionalized under Hu Jintao because Hu has become the legitimate interpreter of the Party’s ideology as the General Secretary of the Party. He will be the inaugural Joe and Teresa Long Endowed Chair in the Social Sciences at Tarleton State University in Stephenville, Texas in the Spring Semester of 2005. He received his Ph.D. in political science from the University of Chicago. He is the author ofChinese Provincial Leaders: Economic Performance and Political Mobility since 1949 (Sharpe, 2002). The author wishes to thank three anonymous referees for their valuable comments on the earlier drafts of this article, Stephine Corso, Nancy Hearst, and Fong Ruey-Jay for their research assistance, and Jessica Loon and Stephine Corso for their editorial assistance.     

Vote-seeking incentives and investment environments: The need for credit claiming and the provision of protectionism

Incentives to cultivate a personal reputation encourage legislators to generate policy outcomes for which they can claim credit. We show that these incentives make themselves felt in international agreements – a domain that might typically be considered within the purview of the executive branch. Through a cross-national analysis and brief case studies, we show that countries with electoral systems that encourage personal vote seeking are more likely to negotiate exceptions to treaties meant to liberalize their investment environments. Legislators benefit by being able to claim credit for having protected their constituents from the competition an unrestricted agreement would entail.     

China’s consumer credit sector expansion and monetary transmission mechanism: What should China’s central bank do?

In this paper, we argue that as China’s consumer credit sector is expanding, the central bank’s role in smoothing economic fluctuation and promoting economic growth becomes more important. We build a general equilibrium model with durable and nondurable goods to analyze how the consumer credit sector affects the transmission mechanism of monetary policy. The model finds that an expanding consumer credit sector improves the efficiency of the monetary transmission mechanism. Two policy implications derived suggest China’s central bank should encourage the development of the consumer credit sector and liberalize market-based monetary policy tools such as interest rate tools. Her fields of interest are international economics, monetary policies and economic growth. Guofeng Sun is the deputy director of open market operation office of monetary policy department at People’s Bank of China. His research focus is the transmission mechanism of monetary policy. The authors thank two anonymous referees for their helpful comments and suggestions. The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the People’s Bank of China.     

Pre-electoral coalitions in comparative perspective: A test of existing hypotheses

Despite the vast coalition literature, pre-electoral coalitions have never been at the center of any systematic, cross-national research. Given their prevalence and potential impact on government composition and policies, this represents a serious omission in our knowledge of coalitions. I begin to remedy this situation by testing two hypotheses found in the literature on party coalitions. The first is that pre-electoral coalitions are more likely to form in disproportional systems if there are a sufficiently large number of parties. The second is that pre-electoral coalitions are more likely to form if voters face high uncertainty about the identity of future governments. These hypotheses are tested using a new dataset comprising legislative elections in 22 advanced industrialized countries between 1946 and 1998. The results of the statistical analysis support the first hypothesis, but not the second.     

Policy Change and Industry Associability: The Australian Mining Sector

In this paper we use evidence from the recent trajectories of mining industry associations in the Australian federation to argue for the significance of institutional explanations for the formation and maintenance of interest groups. We argue that the recent lack of consultation by the Commonwealth government with the Minerals Council of Australia over resources rent taxation proposals reflected a weakness that resulted from the shifting basis of associability stemming from institutional changes.     

The evolution of consciousness: identity and personality in historical perspective

The development of language in human evolution made possible complex social relations. This development led to cultural diversity rather than to uniformity. An important part of such diversity is different ways of constructing and specifying persons as social agents. ‘Consciousness’ is defined as the capacity to construct and narrate courses of action. Different forms of personality, therefore, affect capacities for action. The paper considers such capacities by examining circumstances in which hitherto alien cultures and societies clash. It concentrates on the example of the Spanish conquest of Mexico in the early sixteenth century, and argues that cultural differences and different modes of construction of persons as social actors were a major factor in facilitating the conquest. It is neither concerned to defend the Conquistadoresnor to claim that greater praxeologial effectiveness conferred on their actions superior moral worth, quite the contrary. The Spanish conquest is used to illustrate the phenomenon of distinct societies modes of specifying persons through and as culture.     

Pretexts and US foreign policy: the war on terrorism in historical perspective

This article analyzes the way that US foreign policy élites have used pretexts to manage public opinion. Policymakers, it is argued, often seize upon threatening external events, and use these events to create a favorable political climate in which to “sell” policies of militarization and external expansion to the public. The article argues that the Bush administration has used the threat of terrorism as a pretext to implement a wide range of policies that had been decided upon in advance of the 9/11 attacks. It also argues that the recent uses of pretexts by the Bush administration have strong historical precedents: extended case studies of pretexts are presented for the events surrounding the Korea crisis of 1950 and the Afghanistan crisis of 1979–1980, as well as the more recent War on Terrorism.     

The political rationalities of regionalism: APEC and the EU in comparative perspective

Abstract

The essay is a comparative analysis of APEC and the EU, which looks at the particular sorts of economic orders these institutions are helping to create. It is argued that the two regions display some noteworthy differences that result from different approaches to the problem of economic governance. These differences reflect much more than the relative degree and level of regional institutionalization; they flow from different ‘political rationalities’ that are themselves a function of the very different liberal and illiberal polities in Europe and East Asia. Our key theoretical innovation is to use the framework of political rationality to explain different regional approaches to economic governance; more specifically we argue that the EU and the East Asian members of APEC may be understood as respectively subscribing to broadly conceived liberal and cameralist approaches to economic governance which are in turn reflected in the design of regional institutions.     

The contractual nature of budgeting: A transaction cost perspective on the design of budgeting institutions

Viewing budgets as contracts, transaction cost theory focuses on the costs of negotiating and enforcing the myriad political agreements by which policymakers allocate the government's resources. This essay provides an overview of transaction cost theory and its implications for the design of budgeting institutions. It contrasts the behavioral premises (bounded rationality and opportunism) of the transaction cost approach with those of more traditional budgetary theories, and examines whether commitment and agency costs have structured budget actors' institutional choices. Investigation of the usage of key budget instruments- entitlements, multi-year appropriations, and tax expenditures - suggests that Congress has been more discriminating in its institutional choices than is commonly supposed. Sensitivity to the importance of transaction costs would increase the effectiveness of budget reforms.     

Long swings in the growth of government expenditure: an international historical perspective

Public Choice - Adopting an international historical perspective, this study aims to identify the main empirical regularities in the long-run growth pattern of government expenditure. The...     

关于高校图书馆服务创新的思考

知识经济时代,我国高校图书服务面临着一系列的问题,为解决这些问题,迫切需要进行服务创新。文章分析了我国高校图书服务创新的必要性,剖析了我国高校图书服务目前存在的问题,提出了高校图书服务创新的对策。     

An analysis of the neighborhood impacts of a mortgage assistance program: A spatial hedonic model

Down payment or closing cost assistance is an effective program in addressing the wealth constraints of low‐and moderate‐income homebuyers. However, the spillover effect of such programs on the neighborhood is unknown. This paper estimates the impact of the City of Dallas Mortgage Assistance Program (MAP) on nearby home values using a hedonic model of home sales from 1990 to 2006. We define neighborhoods of 1,000 feet around each sale and estimate the average differences in sales prices between neighborhoods with various numbers of MAP properties before and after their appearance. We find that MAP properties tend to locate in neighborhoods with lower property values; however, unless a concentration of MAP properties forms, the infusion of MAP properties has little detrimental impact on neighboring property values. Moreover, low concentration of MAP properties has a modest positive impact on surrounding property values. © 2010 by the Association for Public Policy Analysis and Management.     

Federalism and the European Union: A constitutional perspective

Constitutional questions have resurfaced in the last few years with regard to the European Union. The Maastricht Treaty is a kind of constitutional reform. The rejection of this treaty by Denmark in its first referendum, and the subsequent debate of the treaty that has taken place, raise questions about both the nature of the European Union, and the process by which its rules (constitution) get revised and approved. Similar questions surround the entry of Austria and the three, additional Scandinavian countries into the Union. Perhaps, no event called the European Union's constitution, or lack thereof, into question more that way in which a new President of the Commission was chosen during the summer of 1994. This paper will reexamine the European Union's structure and procedures from a constitutional perspective. Drawing upon the author's recently completed book, Constitutional Democracy, the paper will review the purpose for the Union's existence, the implications of this purpose for the structure of the Union (federalism versus confederation), the rules for making collective decisions in the Union, citizenship, and in particular, the procedures by which the European Union's “Constitution” is written and revised. The constitutional perspective adopted is taken from public choice. The political institutions of the European Union are examined relative to those rational, self-interested individuals would choose to advance their interests.     

近代黑龙江民族森林工业发展的历史原因初探

近代黑龙江森林工业是黑龙江林业经济史研究中不可或缺的一个组成部分。近代以来,伴随着外来资本主义的侵略,黑龙江林业经济卷入了世界资本主义经济的漩涡之中,迅速走上了近代化的发展道路。在这一过程中,俄、目的巨额资本输出依靠本国侵略势力始终在黑龙江森林工业中占据垄断地位,而本省的民族资本利用一切发展机会奋起抗争,走出了一条不平坦的发展道路。本文就近代黑龙江民族森林工业利用区域性独有的丰富自然资源不仅没有垮掉,而且保持稳定发展态势的历史原因进行了初步探讨,分析了国际国内特殊历史时期的有利因素。     

Back to the Future: The Pulling Apart of our Towns and Cities

Growing divisions between Britain’s towns and cities have created a dilemma for the Labour Party in seeking to represent very different parts of the country. There are some who argue that Labour must choose the global networked youth—who largely reside in cities—in order to maximise its electoral chances. This is an argument that defies electoral gravity and fails to address the root causes of the gulf between towns and cities. As jobs and investment have gone into cities, many towns have seen the local population age and local economies become unsustainable. In both towns and cities there is a clamour for power to move closer to home and for the renewal of democratic institutions, offering Labour the chance to win power and end the divisions that have come to characterise British politics.