The Mortgage Crisis: Historical Context and Recent Responses

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Notes

Among the many components of this legislation, enacted in 2010, are the following: creation of the Federal Oversight Stability Council to safeguard the overall financial sector; limiting the ability of banks to set up “off-balance-sheet” entities, which can conceal risk; requiring greater regulation and transparency for trading of derivative products; instituting greater regulatory oversight of credit rating companies; and creating a new, independent Consumer Financial Protection Bureau. In addition, the legislation prescribed that no bank should be “too big to fail,” and directed that large institutions would have to be broken up, if necessary.

The NSP program was created in 2008 and, in two subsequent funding rounds, has provided financial and technical assistance to states, local governments, nonprofits and a consortium of nonprofit entities on a competitive basis for the purchase and redevelopment of foreclosed and abandoned homes and residential properties. The goal of NSP is to mitigate the adverse neighborhood impacts of foreclosed and vacant properties.

Geithner was the president of the Federal Reserve Bank of New York during the Bush administration. In addition, Lawrence Summers, who had served as Deputy Secretary and Secretary of the Treasury during the Clinton administration, and had actively supported the view that derivative instruments issued by financial institutions did not need federal government regulation, was a close advisor to President Obama. As recently as September 2013, Obama had considered appointing him as the head of the Federal Reserve Bank.

Although on a small scale, a similar initiative is being carried out by Boston Community Capital, a nonprofit organization. Homes are purchased from lenders following a foreclosure and then sold back to the original homeowners, at the newly adjusted, lower market price. “Lender with an Unusual Offer: A Second Chance,” New York Times, Shaila Dawan, March 21, 2012, http://www.nytimes.com/2012/03/22/your-money/program-in-massachusetts-helps-those-facing-foreclosure.html?pagewanted=all&_r=0 (accessed November 9, 2013). Another similar Anther Boston program is focused on retaining former owners and tenants in their homes post-foreclosure, but as renters. See Rachel G. Bratt, “Coalition of Occupied Homes in Foreclosure (COHIF): An Assessment of the Greater Four Corners Community Stabilization Project During the First Two Years.” June 12, 2014. http://www.cohif.org/attachments/BRATT-FINAL-COHIF-12JUNE2014.pdf (accessed September 29, 2014).

In assessing their mortgages, for example, JPMorgan has offered additional compensation for borrowers where irregularities were found. (New York Times: DEALBOOK; “JPMorgan Chase Faces a Full-Court Press of Federal Investigations.” Jessica Silver-Greenberg and Ben Protess. March 27, 2013, http://dealbook.nytimes.com/2013/03/26/jpmorgan-chase-faces-full-court-press-of-federal-investigations/ (accessed November 9, 2013). In addition, as this article was being completed, JP Morgan was on the verge of settling various complaints related to its mortgage lending activities by making an additional $13 billion in payments—$9 billion in fees and $4 billion to struggling homeowners (New York Times: DEALBOOK; “Tentative Deal Hands JP Morgan Chase a Record Penalty.” Ben Protess and Jessica Silver-Greenberg. October 19, 2013, http://dealbook.nytimes.com/2013/10/19/jpmorgan-said-to-be-discussing-13-billion-settlement-over-mortgage-loans/ (accessed November 9, 2013).

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Notes on contributors

Rachel G. Bratt

Rachel G. Bratt is Professor Emerita in the Department of Urban and Environmental Policy and Planning, Tufts University. She is also a Senior Fellow at the Joint Center for Housing Studies, Harvard University. Her Ph.D. is from MIT in Urban and Regional Studies. Professor Bratt’s research focuses on the role of nonprofit organizations in providing decent, affordable housing to low-income households and she has written dozens of articles, book chapters and reports on this topic, and on broader issues related to housing and community development. She is the author or co-editor of three books concerning housing policy in the U.S. Professor Bratt worked as a professional planner in the City of Worcester, Massachusetts and has served on many national, state, and local boards and advisory committees. In her local community, she was on the Wayland (Massachusetts) Planning Board and is currently the chair of the Wayland Housing Partnership.

Dan Immergluck

Dan Immergluck is Professor in the School of City and Regional Planning at Georgia Tech in Atlanta, where he teaches and conducts research on issues of housing, community development, real estate and mortgage finance, and related topics. He is the author of three sole-authored books, more than 40 scholarly articles, numerous book chapters and encyclopedia entries, and scores of applied research and policy reports. Dr. Immergluck has worked with federal, state, and local governments, foundations, and nonprofit organizations on a wide variety of projects. He has testified several times before Congress, as well as before the Federal Reserve Board and a variety of state and local legislative bodies. Professor Immergluck has served as a as a visiting scholar at the Federal Reserve Bank of Atlanta and as a senior fellow with the Center for Community Progress. He is on the Academic Research Council of the Housing Finance Policy Center at the Urban Institute, is an Associate Editor of the Journal of the American Planning Association, and sits on the editorial boards of four journals.