This issue of Housing Policy Debate marks the journal's twentieth year of publication. Much has changed since the first issue. When the journal was first conceived, real estate investors were still recovering from the Savings and Loan crisis and recession of the early 1990s. The cost and quality of housing under the Section 8 program helped undermine deep subsidies for rental housing production for the poor. A new Low Income Housing Tax Credit (LIHTC) which had just been introduced would ultimately become the primary vehicle for promoting the construction of new affordable housing in the US during the 1990s, US federal housing policy evolved to place greater emphasis on poverty deconcentration and promoting choice among those receiving rental housing subsidies. Today, we find ourselves coming full-circle, facing another crisis in real estate finance, one with impacts that extend beyond Wall Street to those who own homes along Main Street. With the current challenges facing the US housing sector, debates around the future of housing policy could not be more timely.
Housing Policy Debate was originally conceived by the Fannie Mae Corporation as a vehicle for promoting policy discussions around important issues facing the housing sector in a previous period of uncertain direction for housing policy. The impetus for its creation was the policy discussion surrounding the 1986 Tax Reform Act, which eliminated the passive loss provisions for real estate investment and subsequently reduced private incentives to invest in multifamily affordable housing. In response to this, members of the Fannie May Corporation and others in the Washington D.C. policy community lobbied Congress to enact new legislation which would provide private incentives for investments in new affordable housing construction. Out of this debate came the 1989 Low Income Housing Tax Credit legislation and the demise of the Section 8 production programs.
In 1990, the Fannie Mae Corporation launched its first Annual Housing Conference to promote wider discussion among the Washington D.C. policy community on issues important to the housing sector. The journal Housing Policy Debate was launched at this conference, and the first several volumes contained articles that were featured at the conference. Jim Carr, the journal's founding editor, and Steve Hornburg, the journal's founding managing editor, were also heavily involved in the political debates which ultimately led to the creation of the LIHTC legislation. Several important articles were published during this time which provided guidance on using the LIHTC to finance private investment in new affordable housing. The success of the conference and the articles featured therein led to the creation of a quarterly journal that has since become a major vehicle for promoting debates around a variety of housing policy issues, including homelessness, regulatory barriers to affordable housing, public housing, the role of regulatory institutions in governing housing finance, predatory lending, and spatial mismatch.
Over the years, the journal's scope expanded to include research on a variety of urban development topics, including urban sprawl, metropolitan opportunity structures, fair growth, and central city revitalization. This expanded scope was in response to the suggestions made by the journal's new Editorial Advisory Board, appointed in 1996. Also in 1996, the journal moved to its new home at the Fannie Mae Foundation, and Rob Lang assumed responsibilities as the journal's managing editor.
In 2007, the journal underwent another editorial transition. As the Fannie Mae Foundation was being dissolved, a request for proposals was issued to find the journal a more permanent academic home. Virginia Tech received the contract to publish the journal in-house, and Rob Lang and Katrin Anacker assumed responsibilities as co-editors. To ensure that the journal would have a sustainable future following the end of the Fannie Mae contract supporting its publication, Virginia Tech then sought and secured the support of Taylor & Francis to publish the journal on a subscription basis. I became Co-Editor along with Rob Lang at this time and then sole Editor.
Since its inception in 1990, the journal has become one of the premiere sources of information on current research and policy debates pertaining to housing and urban development. Several seminal articles shaped current thinking on US housing policy, including William Apgar's “Which Housing Policy is Best,” (Volume 1, Issue 1) which helped frame thinking on US housing policy, Michael A. Stegman's “The Excessive Costs of Creative Finance: Growing Inefficiencies in the Production of Low-Income Housing,” (Volume 2, Issue 2) which challenged the use of tax credits to promote affordable housing, and James E. Rosenbaum's “Black Pioneers – Do Their Moves to the Suburbs Increase Economic Opportunity for Mothers and Children,” which presented early results from the Gautreaux experiment. Other articles shaped how we currently conceptualize and operationalize important policy issues such as homelessness (Michael L. Dennis, “Changing the Conventional Rules: Surveying Homeless People in Nonconventional Locations” and Franklin J. James' “Counting Homeless Persons With Surveys of Users of Services for the Homeless,” both in Volume 2, Issue 3), neighborhood distress (John D. Kasarda, “Inner City Concentrated Poverty and Neighborhood Distress: 1970 to 1990 ” Volume 4, Issue 3), neighborhood threshold effects (George C. Galster, Roberto G. Quercia, and Alvaro Cortes, “Identifying Neighborhood Thresholds: An Empirical Exploration), and urban sprawl (George Galster, Royce Hanson, Hal Wolman, Stephen Coleman, and Jason Freihage, “Wrestling Sprawl to the Ground: Defining and Measuring an Elusive Concept,” Volume 12, Issue 4). Still others organized the academic literature to reframe our thinking on housing policy topics such as the spatial mismatch (John Kain's “The Spatial Mismatch Hypothesis: Three Decades Later,” Volume 3, Issue 2 and Keith R. Ihlanfeldt and David L. Sjoquist's “The Spatial Mismatch hypothesis: A Review of Recent Studies and Their Implications for Welfare Reform,” Volume 9, issue 4), neighborhood effects (Ingrid Gould Ellen and Margery Austin Turner, “Does Neighborhood Matter? Assessing Recent Evidence,” Volume 8, Issue 4), and racial discrimination in housing (George C. Galster, “Research on Discrimination in Housing and Mortgage Markets: Assessment and Future Directions,” Volume 3, Issue 2, and John Yinger's “Housing Discrimination is Still Worth Worrying About,” Volume 9, Issue 4).
In this issue, we reflect on these contributions and explore the past and future of housing policy in the wake of the most significant US financial crisis since the Great Depression. In this issue's Forum, Jim Carr, the Journal's founding editor, reflects on the current foreclosure crisis and offers recommendations for steps that must be taken to ameliorate the effects of the crisis and avoid similar disasters in the future. He argues that comprehensive interventions are the only way to leverage scarce public resources to achieve the public policy outcomes we desire. Among those suggested by Carr include a number of steps to prevent foreclosures and expand low income homeownership particularly among low income borrowers. Carr argues for the creation of a comprehensive national housing policy that links housing investment to economic development and land use policies. Theodore Koebel offers a dissenting comment on Carr's policy recommendations, ending his critique with a timely quote from Kris Kristofferson's “Pilgrim Chapter 33.”
Following the Forum and Comment, this issue features several research articles that each address different dimensions of the ongoing foreclosure crisis. “Originating Lender Localness and Mortgage Sustainability: An Evaluation of Delinquency and Foreclosure in Indiana's Mortgage Revenue Bond Program,” by Stephanie Moulton examines mortgage delinquency, focusing on characteristics of the originating lender. She finds that the impacts of originating lender characteristics, particularly the “localness” of the originator, are larger in magnitude and more significant for high risk borrowers, suggesting that the borrowers often targeted for low-income homeownership initiatives may be the most vulnerable to the influence of originating lenders.
In “The Accumulation of Lender-Owned Homes During the US Mortgage Crisis: Examining Metropolitan REO Inventories,” Dan Immergluck examines the factors contributing to metropolitan differences in the accumulation of Real Estate Owned (REO) properties over the 2006–2008 period, emphasizing the role of state-level differences in the foreclosure process. He finds that longer pre-foreclosure periods are associated with smaller increases in REO volumes, while longer post-sale redemption periods are associated with larger increases in REO volumes. These findings have important implications for state foreclosure policies, which he discusses in the article.
Desiree Fields, Kimberly Libman, and Susan Saegert examine homeowners' responses to mortgage delinquency and the success of the strategies they employ to prevent foreclosure in, “Turning Everywhere, Getting Nowhere: Experiences of Seeking Help for Mortgage Delinquency and their Implications for Foreclosure Prevention.” The authors find a complex interplay of poorly timed information, conflicting interests, and compounding obstacles that led many homeowners down the path to foreclosure instead of aiding them in avoiding it. The events precipitating mortgage delinquency had “cascading effects,” placing multiple demands on homeowners' financial, emotional and social resources. These findings point to the need for more systematic, enforceable, and preventive approaches to foreclosure prevention.
William H. Rogers investigates the dynamic nature of the “neighborhood effect” of foreclosures in “Declining Foreclosure Neighborhood Effects over Time.” He finds that evidence supporting a declining neighborhood effect over time. While the policy implications of his findings are less direct, his findings are consistent with a variety of local and national policy responses, which he outlines in the paper. Furthermore, his paper offers new information on the temporal path of foreclosures and offers suggestions as to how this may relate to market structure, particularly the “thickness” of the market for distressed properties.
In “Foreclosing on the American Dream? The Financial Consequences of Low-Income Homeownership,” George C. Galster, Ana Santiago-San Roman, Cristina Tucker, Angela Kaiser, and Rebecca Grace utilize information obtained from 122 very low income participants in the Denver Home Ownership Program (HOP) program to address the question, “Can very low-income households build wealth through sustainable homeownership, with the aid of an innovative public program?” The authors find that homeownership attained through HOP provided very low-income households with opportunities to build home equity and net wealth, though these results were contingent on the time of purchase and ethnicity. Their results offer promise for policies designed to expand affordable homeownership opportunities.
We close the issue with the Outlook piece, “The Preventable Foreclosure Crisis” by Roberto G. Quercia and Janneke Ratcliffe, which examines what went wrong leading up to the current foreclosure crisis and what could have been done to fix it. The crux of this debate, as pointed out by the authors, is whether the crisis was caused by a lack of financial regulation or an excess of regulation in the form of the Community Reinvestment Act (CRA) and policies promoting affordable home ownership and lending. They argue that a large part of what “went wrong” can be attributed to the failure of policy makers and regulators to recognize and act on the distinction between mortgage policies aimed at promoting affordable home ownership with the excesses of the subprime and Alt-A market.
As noted in Ted Koebel's Comment in this issue, reflecting on the recent housing market roller coaster, “The past 20 years were dominated by a boom and bust equal to a junkie's high and crash,” Going forward, new intervention strategies will need to be developed, whether this means offering the junkie a new drug, sending the junkie to rehab, or arresting the junkie's dealer. Regardless of the path taken, the pages of this journal will continue to chronicle, critique, and shape the debate.