|
Articles:
180 Years? Evolution of
the US Mortgage Banking System: Authors: Man Cho Start Page:
171 Abstract:
This study is structured around two
objectives: surveying the 180 years? evolution of the US mortgage
intermediation system (MIS); and, extracting the lessons to be learned by
emerging mortgage markets. To that end, I first discuss three pillars of a
well-functioning MIS as a conceptual underpinning - intermediation
efficiency, affordability enhancement, and risk management. The historical
survey proceeds based on four reasonably distinct time periods ? (1) the era
of exploration (pre-1930s or pre-Great Depression era), (2) the era of
institutionalization (1930s to 1960s), (3) the era of market-making (1970s
and 1980s), and (4) the era of expansion and efficiency gain (1990s to
Present). Based on the survey done, the lessons for other countries are
organized under five topics: developing conforming mortgage product and
market; extending the service to nonconforming segments; managing default
and prepayment risks; managing systemic risk; and, developing an efficient
intermediation process. The concluding remarks in the final section comprise
the issue of right sequencing: that is, through what steps an MIS in a given
country can be evolved toward a more market-based one that can deliver a
higher degree of consumer welfare. |
|