Friday, February 24, 2012

Fixing the Housing Market: Financial Innovations for the Future by Franklin Allen, James R. Barth, and Glenn Yago


The blurb:
Since the ancient Greeks, financial innovation has enabled more people to own homes. Today, responsible financial innovation is the best tool available for rebooting crippled housing markets, improving their efficiency, and making housing more accessible.  In this book, three leading experts explain why and cover everything decision-makers should know about housing finance.

The authors first clarify how housing financial products, services, and institutions evolved through the past two centuries, culminating in the era of securitization and the "mortgage meltdown."  Next, they assess housing finance systems in today's mature economics, highlighting benefits and risks associated with each leading mortgage funding structure and products. They also assess housing finance in emerging economies such as Brazil, Russia, India, and China.

Building on these insights, the authors identify important financial innovations that can facilitate a more stable and sustainable financing system for housing - providing better shelter for more people, helping the industry recover, and creating thousands of new jobs.

Review:
Fixing the Housing Market: Financial Innovations for the Future is clearly the work of experts in the field and in economics. It is the joint effort of Franklin Allen, James R. Barth, and Glenn Yago. Franklin Allen is a professor of Finance and Economics at the Wharton School of Business at the University of Pennsylvania. James Barth is a professor of Finance and a Finance Fellow at the Milken Insitute whose research focuses on financial institutions, capital markets, and regulatory issues. Glenn Yago is Senior Director at the Milken Institute and founder of the Institute's Financial Innovations Lab.

The book opens with a broad explanation of the current state of the global housing crisis, an overview of financing for housing, the economics of housing and financial innovations in financing. The writing is clear and persuasive, illustrated with charts and graphs, and carefully supported with citations.

I found the chapter on Building Blocks of Modern Housing Finance particularly fascinating and informative. The book compares U.S. homeownership to homeownership in Europe from 1890 to the present through an examination of a range of factors such as but not limited to cultural values, low rents, conservative mortgage lending, and amount of support for "social" rental housing. The book covers various U.S. laws, U.S. government institutions and government owned or supported institutions, their creation and their impact on the ability of Americans to purchase homes. The chapter also shows risks unique to the U.S. housing market and the reasons for these vulnerabilities.

I'm not an economist. I'm interested in the housing market and the mortgage crisis as a homeowner and an investor in real estate. I read the book to get a better understanding of the mortgage industry, the various government programs that help shore up homeownership, and to learn more about financing for real estate projects. Fixing the Housing Market was extremely helpful as it provided me with a fuller understanding of financing home purchases and government programs on homeownership. Highly recommended!

ISBN-10: 0137011601 - Hardcover $34.99
Publisher: Pearson Prentice Hall; 1 edition (February 24, 2012), 208 pages.
Review copy courtesy of the Amazon Vine Program and the publisher.
ISBN-10: 0137011601 - Hardcover $34.99
Publisher: Pearson Prentice Hall; 1 edition (February 24, 2012), 208 pages.
Review copy courtesy of the Amazon Vine Program and the publisher.

About the Authors:
Franklin Allen is a Nippon Life Professor of Finance and Professor of Economics at The Wharton School of the University of Pennsylvania, co-directs the Wharton Financial Institutions Center.  He has led several key academic organizations, including the American Finance Association and Society for Financial Studies.  Allen is co-author of Financing the Future and Principles of Corporate Finance.

James R. Barth is the Lowder Eminent Scholar in Finance at Auburn University and a Senior Finance Fellow at the Milken Institute.  His research focuses on financial institutions and capital markets, both domestic and global, with special emphasis on regulatory issues.  He was a presidential appointee and served as chief economist of the Office of Thrift Supervision and previously the Federal Home Loan Bank Board.  He recently served as leader of an international team advising the People's Republic of China on banking reform.  With Glenn Yago, he co-authored The Rise and Fall of the U.S. Mortgage and Credit Markets.


Glenn Yago is Senior Fellow/Senior Director at the Milken Institute and founder of the Institute's Financial Innovations Lab.  An authority on financial innovation, capital markets, emerging markets, and environmental finance, he has contributed to the democratization of capital in underserved markets and on behalf of entrepreneurs in the United States and worldwide.

2 comments:

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