Columbia Business School’s thought leadership on issues related to the U.S. housing crisis has gained the attention of the media and policymakers alike. This page is a guide to related background, analyses and opinions.
Loan Modification Proposal
by Christopher Mayer, Edward Morrison, and Tomasz Piskorski
“A New Proposal for Loan Modifications” (1/07/2009; full proposal, PDF)
This proposal aims to stem foreclosures through loan modifications by targeting privately securitized mortgages, which are at the core of the housing crisis, accounting for more than 50 percent of foreclosure starts. We estimate that the plan would prevent nearly one million foreclosures over three years, at a cost of no more than $10.7 billion.
This proposal, coupled with Prof. Mayer and Dean Glenn Hubbard's earlier proposal (below) for the federal government to reduce mortgage rates, is part of a two-pronged approach to stabilize the housing market and prevent foreclosures.
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House Prices and Interest Rates
by R. Glenn Hubbard and Christopher Mayer
In the paper, we demonstrate that house prices are strongly related to mortgage rates, using evidence from the U.S. and countries around the world. We also argue that house prices are already at or below where they should be based on fundamentals. Finally, the paper provides more detailed arguments in favor of our original housing policy proposal.
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The Original Hubbard Mayer Proposal
by R. Glenn Hubbard and Christopher Mayer
In this original proposal, we recommended allowing all residential mortgages on primary residences to be refinanced into 30-year fixed-rate mortgages at 5.25% (matching the lowest mortgage rate in the past 30 years), and placed with Fannie Mae and Freddie Mac.
Our plan would cover any existing homeowner or new purchaser of a home who was able to document their income, show that they can afford the mortgage that they are taking out, and document that they are residing in their home as a permanent residence.
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