Successful home ownership requires the availability of appropriate mortgage products. In the years leading up to the collapse of the housing market, home buyers frequently accepted mortgages that were not only wrong for them but catastrophic for the economy as a whole. When the housing market bubble burst, so did a cornerstone of the American dream for many families. Restoring the promise of this dream requires an unflinching inspection of lending institutions and the right tools to repair the structures that support solid home purchases. The American Mortgage System: Crisis and Reform focuses on the causes of the housing market collapse and proposes solutions to prevent another rash of foreclosures.

Edited by two leaders in the field of real estate and finance, Susan M. Wachter and Marvin M. Smith, The American Mortgage System examines key elements of the mortgage meltdown. The volume's contributors address the influence of the Community Reinvestment Act, which is often blamed for the crisis. They uncover how the government-sponsored enterprises Fannie Mae and Freddie Mac invested outside the housing market with disastrous results. They present surprising information about low-income borrowers and the strengths of local banks. This collection of thoughtful studies includes extensive analysis of loan practices and the creation of unstable mortgage securities, presenting data largely unavailable until now. More than a critique, The American Mortgage System offers solutions to the problems facing the future of American home ownership, including identifying asset price bubbles, calculating risk, and preventing discrimination in lending.

Measured yet timely and by turns provocative, The American Mortgage System provides a careful assessment of a troubled but indispensable part of the economic and social structure of the United States. This book is a sound investment for economists, urban planners, and all who shape public policy.

Introduction
—Marvin M. Smith and Susan M. Wachter

Part I Crisis: Origins and Solutions
1 The Secondary Market for Housing Finance in the United States: A Brief Overview
—Ingrid Gould Ellen, John Napier Tye, and Mark A. Willis
2 Reasonable People Did Disagree: Optimism and Pessimism About the U.S. Housing Market Before the Crash
—Kristopher S. Gerardi, Christopher L. Foote, and Paul S. Willen
3 Exploring the Determinants of High-Cost Mortgages to Homeowners in Low- and Moderate-Income Neighborhoods
—Michael S. Barr, Jane K. Dokko, and Benjamin J. Keys
4 Implications of the Housing Market Bubble for Sustainable Homeownership
—Paul S. Calem, Leonard Nakamura, and Susan M. Wachter
5 A Framework for Consumer Protection in Home Mortgage Lending
—Kathleen Engel and Thomas J. Fitzpatrick, IV

Part II Community Impact
6 A Profile of the Mortgage Crisis in a Low- and Moderate-Income Community
—Lynn Fisher, Lauren Lambie-Hanson, and Paul S. Willen
7 Constructive Credit: Revisiting the Performance of Community Reinvestment Act Lending
During the Subprime Crisis
—Carolina Reid and Elizabeth Laderman
8 Navigating the Housing Downturn and Financial Crisis: Home Appreciation and Equity Accumulation Among Community Reinvestment Homeowners
—Sarah F. Riley and Roberto G. Quercia
9 The Community Reinvestment Act: Evaluating Past Performance and Reviewing Options for Reform
—Mark A. Willis

Part III Reforming the Financial Architecture
10 Information Failure and the U.S. Mortgage Crisis
—Adam J. Levitin and Susan M. Wachter
11 The Expanding Financial Safety Net: The Dodd-Frank Act as an Exercise in Denial and Cover-Up
—Edward J. Kane
12 A Private Lender Cooperative Model for Residential Mortgage Finance
—Toni Dechario, Patricia C. Mosser, Joseph Tracy, James Vickery, and Joshua Wright
13 Improving U.S. Housing Finance Through Reform of Fannie Mae and Freddie Mac: A Framework for Evaluating Alternatives
—Ingrid Gould Ellen and Mark A. Willis
14 Some Thoughts on What to Do with Fannie Mae and Freddie Mac
—Robert Van Order
15 The Road Not Taken: Our Failure in Redoing the Financial Architecture
—Vincent Reinhart

List of Contributors
Index
Acknowledgments

The American Mortgage System

Crisis and Reform

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