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Covered Farm Mortgage Bonds in the United States During the Late Nineteenth Century

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  • Snowden, Kenneth A.

Abstract

Covered mortgage bonds have been used successfully in Europe for two centuries, but failed in the United States when introduced as farm mortgage debentures in the 1880s. Using firm-level data and a sample of loans made by one Kansas mortgage company, I find that debenture programs grew out of established loan brokerage operations and were used to fund mortgages that were difficult to broker because of size, term, or risk characteristics. Debentures broadened access to the interregional mortgage market and facilitated an expansion of western farm mortgage debt before the innovation failed in the mortgage crisis of the 1890s.“[T]he availability of affordable mortgage financing is essential to turning the corner on the current housing crisis …. One option we have looked at extensively is covered bonds, which … have the potential to increase mortgage financing, improve underwriting standards, and strengthen U.S. financial institutions ….†Secretary of Treasury Henry PaulsonJuly 28, 2008

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  • Snowden, Kenneth A., 2010. "Covered Farm Mortgage Bonds in the United States During the Late Nineteenth Century," The Journal of Economic History, Cambridge University Press, vol. 70(4), pages 783-812, December.
    • Handle: RePEc:cup:jechis:v:70:y:2010:i:04:p:783-812_00
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    Cited by:

    1. Rose, Jonathan D. & Snowden, Kenneth A., 2013. "The New Deal and the origins of the modern American real estate loan contract," Explorations in Economic History, Elsevier, vol. 50(4), pages 548-566.
    2. Rose, Jonathan & Snowden, Kenneth, 2012. "The New Deal and the Origins of the Modern American Real Estate Loan Contract in the Building and Loan Industry," UNCG Economics Working Papers 12-6, University of North Carolina at Greensboro, Department of Economics.
    3. Andra Ghent & Rossen Valkanov, 2016. "Comparing Securitized and Balance Sheet Loans: Size Matters," Management Science, INFORMS, vol. 62(10), pages 2784-2803, October.
    4. Ordoñez, Guillermo, 2018. "Confidence banking and strategic default," Journal of Monetary Economics, Elsevier, vol. 100(C), pages 101-113.
    5. Bhanot, Karan & Larsson, Carl F., 2018. "Uncovering the impact of regulatory uncertainty on credit spreads: A study of the U.S. covered bond experience," Journal of Financial Markets, Elsevier, vol. 39(C), pages 84-110.
    6. Timothy Blackwell & Sebastian Kohl, 2018. "Urban heritages: How history and housing finance matter to housing form and homeownership rates," Urban Studies, Urban Studies Journal Limited, vol. 55(16), pages 3669-3688, December.

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