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

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