Why is Housing Finance Still Stuck in Such a Primitive Stage?

Abstract

The institutions for financing owner-occupied housing have not progressed as they should, and the financial innovation that has followed the financial crisis of 2007-9 has not been focused on improving the risk management of individual homeowners. This paper lists a number of barriers to housing finance innovation, and in light of these barriers, the problems of some major innovations of the past and future: self-amortizing mortgages, price-level adjusted mortgages (PLAMs), shared appreciation mortgages (SAMs), housing partnerships, and continuous workout mortgages (CWMs).

Keywords: Mortgages, securitization, Financial crises, Self-amortizing mortgages, Installment mortgages, Level-payment mortgages, Price-level-adjusted mortgages (PLAMs), Shared appreciation mortgages (SAMs), Housing partnerships, continuous workout mortgages (CWMs), Automatic workout mortgages (AWMs)

JEL Classification: R31