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Comment on Michael A. Stegman et al.’s “Preventive servicing is good for business and affordable homeownership policy”

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  • Richard K. Green

Abstract

Stegman et al. show that high‐quality servicing can help keep borrowers who would normally be considered subprime from experiencing foreclosure. This comment discusses the results Stegman et al. present and also explains how loan modification helped alleviate past mortgage crises—specifically, how the housing finance crisis during the Great Depression was solved largely by the federal government, using its access to capital markets. The government purchased mortgages that had balloon payments and were in default, reinstated them, and then repackaged them to become long‐term, fixed‐payment, self‐amortizing mortgages. Similarly, after government policy created the S&L problem, government intervention helped alleviate the resulting mortgage crisis.

Suggested Citation

  • Richard K. Green, 2007. "Comment on Michael A. Stegman et al.’s “Preventive servicing is good for business and affordable homeownership policy”," Housing Policy Debate, Taylor & Francis Journals, vol. 18(2), pages 299-309, January.
    • Handle: RePEc:taf:houspd:v:18:y:2007:i:2:p:299-309
    DOI: 10.1080/10511482.2007.9521602
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    References listed on IDEAS

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    1. Richard K. Green & Susan M. Wachter, 2005. "The American Mortgage in Historical and International Context," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 93-114, Fall.
    2. Yongheng Deng & John M. Quigley & Robert Van Order, 2000. "Mortgage Terminations, Heterogeneity and the Exercise of Mortgage Options," Econometrica, Econometric Society, vol. 68(2), pages 275-308, March.
    3. Green, Richard K., 1999. "Land Use Regulation and the Price of Housing in a Suburban Wisconsin County," Journal of Housing Economics, Elsevier, vol. 8(2), pages 144-159, June.
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