[Download] "Appendix 4: Historical Background on the Mortgage Insurance Industry: Lessons from the Great Depression (Taking the Government out of Housing Finance: Principles for Reforming the Housing Finance Market)" by AEI Paper & Studies # Book PDF Kindle ePub Free
eBook details
- Title: Appendix 4: Historical Background on the Mortgage Insurance Industry: Lessons from the Great Depression (Taking the Government out of Housing Finance: Principles for Reforming the Housing Finance Market)
- Author : AEI Paper & Studies
- Release Date : January 24, 2011
- Genre: Social Science,Books,Nonfiction,
- Pages : * pages
- Size : 70 KB
Description
During the 1920s and early 1930s, a large volume of MBS (called mortgage certificates),93 backed by mortgage guarantee companies, was sold to the public. By 1934, the mortgage certificates were in default and the guarantee companies had failed. The governor of New York (where most of the activity had taken place) appointed George Alger as commissioner to investigate the operation, conduct, and management of mortgage guarantee companies. (94) Commissioner Alger was specifically charged with "once again instilling public confidence in real estate as an investment." This is not unlike the challenge we face today as we endeavor to reform our housing finance market and re-instill investor confidence. Commissioner Alger's report provides useful insights into both the causes of the most recent collapse and policy recommendations for avoiding a repeat occurrence. While it would be twenty-three years before any mortgage guaranty company would be formed in the United States, (95) Alger's recommendations formed the backbone of the state-based regulatory structure governing the formation and operation of mortgage guaranty insurance companies. This structure largely remains in place today and, in substantial measure, explains why the US mortgage guaranty insurance industry has largely survived intact, still paying claims and writing new business, (96) while Fannie Mae and Freddie Mac--along with many bond insurers, securities issuers, lending institutions, and private MBS--failed.
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