Housing and the New Financial Mark

The 1990s witnessed a revolution in the way the United States finances housing. Gone is the insulated system of thrifts whose special job was to collect savings deposits and issue mortgages. Gone too are the institutional foundations of this system-the passbook account and the fixed-rate mortgage. Mortgage lending in this new financial environment is increasingly the province of a shrinking group of large financial firms. These firms compete for funds in domestic and international markets as well as issue and sell the new adjustable-rate mortgages. Richard L. Florida notes that it is not surprising that the reorganization of the housing finance system has become the focus of a policy debate and a growing academic literature. A host of questions have been raised by policymakers. What are the driving forces behind the financial deregulation? How does deregulation affect housing finance? What are the new institutions and instruments being used to allocate housing credit and how do they work? How does the new housing finance system influence the cost and affordability of shelter? What is the future of housing finance? These are the core questions addressed in this book. Housing and the New Financial Marketsis divided into seven sections. The first examines the basic institutions and operations of the New Deal system. A second section turns to early deregulation efforts-including the Commission on Money and Credit, the Friend Study, the Hunt Commission, and the FINE Study. Florida then presents a detailed examination of the new financial regulation, focusing on the Depository Institutions Deregulation and Monetary Control Act and the Garn-St. Germain Act. He examines the reorganization of the thrift industry in the wake of these developments and analyzes the rise of the secondary mortgage market. He concludes by providing a number of tentative visions on the future of housing finance.