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Implications of the Housing Market Bubble for Sustainable HomeownershipPaul CalemFederal Reserve Board Leonard I. NakamuraFederal Reserve Bank of Philadelphia Susan M. WachterUniversity of Pennsylvania - Wharton School, Department of Real Estate November 2, 2010 THE AMERICAN MORTGAGE SYSTEM: RETHINK AND REFORM, Susan Wachter and Marty Smith, eds., University of Pennsylvania Press, Forthcoming U of Penn, Inst for Law & Econ Research Paper No. 10-27 Abstract: This paper presents evidence on the impact of the housing bubble, flood of high risk mortgage lending, and subsequent meltdown in homeownership. We point to agency and information problems in the mortgage origination and securitization market; incomplete risk transfer; and underassessment of systemic risk. These factors and their relationship to exaggerated house price dynamics and excessive volatility undermine the objective of sustainable homeownership. This requires attention from policymakers, including a need for improved financial and regulatory data.
Number of Pages in PDF File: 33 Keywords: Mortgage, High Risk Mortgage, High Risk Lending, Securitization, Risk Transfer, Housing Bubble JEL Classification: G21, G24, K20 Accepted Paper SeriesDate posted: November 3, 2010Suggested CitationContact Information
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