Prime Property Institutions for a Subprime Era: Toward Innovative Models of Homeownership

Berkeley Business Law Journal, Vol. 8, pp. 1-34, 2011

UPF Economics & Business Working Paper No. 1217

34 Pages Posted: 11 May 2010 Last revised: 1 Jun 2011

Benito Arruñada

Pompeu Fabra University

Amnon Lehavi

Interdisciplinary Center Herzliyah - Radzyner School of Law

Date Written: January 11, 2011

Abstract

This Article breaks new ground toward contractual and institutional innovation in models of homeownership, equity building, and mortgage enforcement. Inspired by recent developments in the affordable housing sector and in other types of public financing schemes, we suggest extending institutional and financial strategies such as time- and place-based division of property rights, conditional subsidies, and credit mediation to alleviate the systemic risks of mortgage foreclosure. Two new solutions offer a borad theoretical basis for such developments in the economic and legal institution of homeownership: a for-profit shared equity scheme led by local governments alongside a private market shared equity model, one of "bootstrapping home buying with purchase options."

Keywords: property, homeownership, mortgage, finance, local government, subsidy, tax

JEL Classification: D23, E62, H31, H71, K11, R31

Suggested Citation

Arruñada, Benito and Lehavi, Amnon, Prime Property Institutions for a Subprime Era: Toward Innovative Models of Homeownership (January 11, 2011). UPF Economics & Business Working Paper No. 1217. Available at SSRN: https://ssrn.com/abstract=1601172 or http://dx.doi.org/10.2139/ssrn.1601172

Benito Arruñada (Contact Author)

Pompeu Fabra University ( email )

Ramon Trias Fargas 25-27
Department of Economics and Business
Barcelona, 08005
Spain
+34 93 542 25 72 (Phone)
+34 93 542 17 46 (Fax)

HOME PAGE: http://www.econ.upf.edu/~arrunada

Amnon Lehavi

Interdisciplinary Center Herzliyah - Radzyner School of Law ( email )

P.O. Box 167
Herzliya, 46150
Israel
972 9 9602765 (Phone)
972 9 9568605 (Fax)

HOME PAGE: http://www.idc.ac.il

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