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The Anatomy of a Residential Mortgage Crisis: A Look Back to the 1930s

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  • Kenneth A. Snowden

Abstract

Looking back to the 1930s provides the opportunity to examine one severe mortgage crisis as we live through another. This paper examines the development of the residential mortgage market during the 1920s, the institutional disruptions that occurred in the 1930s and the policy response of federal and state governments. The crisis reshaped the structure and development of the residential mortgage market and led to a postwar system in which portfolio lenders dominated both local and interregional markets. Some pre-1930 innovations—mortgage insurance and high-leverage, affordable loans—were written into federal programs and became part of the new system. But early experiments and proposals for securitization did not survive the 1930s and the implementation of this innovation was delayed for forty years.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16244.

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Date of creation: Jul 2010
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Publication status: published as "The Anatomy Of A Residential Mortgage Crisis: A Look Back To The 1930s", in L. Mitchell (ed.) The Panic of 2008: Causes, Consequences and Proposals for Reform.
Handle: RePEc:nbr:nberwo:16244

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  1. Kenneth Snowden, 1995. "The Evolution of Interregional Mortgage Lending Channels, 1870-1940: The Life Insurance-Mortgage Company Connection," NBER Chapters, National Bureau of Economic Research, Inc, in: Coordination and Information: Historical Perspectives on the Organization of Enterprise, pages 209-256 National Bureau of Economic Research, Inc.
  2. Snowden, Kenneth A., 1988. "Mortgage Lending and American Urbanization, 1880–1890," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 48(02), pages 273-285, June.
  3. Snowden, Kenneth A, 1997. "Building and loan associations in the U.S., 1880-1893: the origins of localization in the residential mortgage market," Research in Economics, Elsevier, Elsevier, vol. 51(3), pages 227-250, September.
  4. Kenneth A. Snowden, 2010. "Covered Farm Mortgage Bonds in the Late Nineteenth Century U.S," NBER Working Papers 16242, National Bureau of Economic Research, Inc.
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Cited by:
  1. Alexander J. Field, 2013. "The Interwar Housing Cycle in the Light of 2001–2012: A Comparative Historical Perspective," NBER Chapters, National Bureau of Economic Research, Inc, in: Housing and Mortgage Markets in Historical Perspective, pages 39-80 National Bureau of Economic Research, Inc.
  2. Michael Brocker & Christopher Hanes, 2013. "The 1920s American Real Estate Boom and the Downturn of the Great Depression: Evidence from City Cross-Sections," NBER Chapters, National Bureau of Economic Research, Inc, in: Housing and Mortgage Markets in Historical Perspective, pages 161-201 National Bureau of Economic Research, Inc.
  3. Kenneth Snowden, 2013. "A Historiography of Early NBER Housing and Mortgage Research," NBER Chapters, National Bureau of Economic Research, Inc, in: Housing and Mortgage Markets in Historical Perspective, pages 15-36 National Bureau of Economic Research, Inc.
  4. Courtemanche, Charles & Snowden, Kenneth, 2011. "Repairing a Mortgage Crisis: HOLC Lending and Its Impact on Local Housing Markets," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 71(02), pages 307-337, June.
  5. Daniel K. Fetter, 2011. "How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-century GI Bills," NBER Working Papers 17166, National Bureau of Economic Research, Inc.
  6. Rik Frehen & William N. Goetzmann & K. Geert Rouwenhorst, 2013. "Dutch Securities for American Land Speculation in the Late Eighteenth Century," NBER Chapters, National Bureau of Economic Research, Inc, in: Housing and Mortgage Markets in Historical Perspective, pages 287-304 National Bureau of Economic Research, Inc.
  7. Kenneth Snowden & Eugene N. White & Price Fishback, 2013. "Introduction to "Housing and Mortgage Markets in Historical Perspective"," NBER Chapters, National Bureau of Economic Research, Inc, in: Housing and Mortgage Markets in Historical Perspective, pages 1-13 National Bureau of Economic Research, Inc.
  8. Douglas J. Elliott & Greg Feldberg & Andreas Lehnert, 2013. "The history of cyclical macroprudential policy in the United States," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2013-29, Board of Governors of the Federal Reserve System (U.S.).
  9. Natacha Postel-Vinay, 2014. "Debt Dilution in 1920s America: Lighting the Fuse of a Mortgage Crisis," Working Papers, European Historical Economics Society (EHES) 0053, European Historical Economics Society (EHES).
  10. Eugene N. White, 2013. "Lessons from the Great American Real Estate Boom and Bust of the 1920s," NBER Chapters, National Bureau of Economic Research, Inc, in: Housing and Mortgage Markets in Historical Perspective, pages 115-158 National Bureau of Economic Research, Inc.
  11. Daniel K. Fetter, 2013. "The Twentieth-Century Increase in U.S. Home Ownership: Facts and Hypotheses," NBER Chapters, National Bureau of Economic Research, Inc, in: Housing and Mortgage Markets in Historical Perspective, pages 329-350 National Bureau of Economic Research, Inc.
  12. W. Scott Frame & Lawrence J. White, 2014. "Technological Change, Financial Innovation, and Diffusion in Banking," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 14-02, New York University, Leonard N. Stern School of Business, Department of Economics.
  13. Alexander J. Field, 2013. "The Interwar Housing Cycle in the Light of 2001-2011: A Comparative Historical Approach," NBER Working Papers 18796, National Bureau of Economic Research, Inc.

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