Foreclosed: High-Risk Lending, Deregulation, and the Undermining of America's Mortgage Market

by Dan Immergluck

Over the last two years, the United States has observed, with some horror, the explosion and collapse of entire segments of the housing market, especially those driven by subprime and alternative or "exotic" home mortgage lending. The unfortunately timely Foreclosed explains the rise of high-risk lending and why these newer types of loans―and their associated regulatory infrastructure―failed in substantial ways. Dan Immergluck narrates the boom in subprime and exotic loans, recounting how financial innovations and deregulation facilitated excessive risk-taking, and how these loans have harmed different populations and communities. Immergluck, who has been working, researching, and writing on issues tied to housing finance and neighborhood change for almost twenty years, has an intimate knowledge of the promotion of homeownership and the history of mortgages in the United States. The changes to the mortgage market over the past fifteen years―including the securitization of mortgages and the failure of regulators to maintain control over a much riskier array of mortgage products―led, he finds, inexorably to the current crisis. After describing the development of generally stable and risk-limiting mortgage markets throughout much of the twentieth century, Foreclosed details how federal policy-makers failed to regulate the new high-risk lending markets that arose in the late 1990s and early 2000s. The book also examines federal, state, and local efforts to deal with the mortgage and foreclosure crisis of 2007 and 2008. Immergluck draws upon his wealth of experience to provide an overarching set of principles and a detailed set of policy recommendations for "righting the ship" of U.S. housing finance in ways that will promote affordable yet sustainable homeownership as an option for a broad set of households and communities.

280 pages, Hardcover

First published April 16, 2009

About the author

Dan Immergluck is Professor of Urban Studies at Georgia State University. His research concerns housing, neighborhood change, and real estate markets. Dr. Immergluck is the author of five books and over 120 scholarly articles, book chapters, and research reports. He has consulted to the US Department of Housing and Urban Development, the US Department of Justice, foundations, and nonprofit organizations. Professor Immergluck has been cited and quoted in the New York Times, the Washington Post, National Public Radio, the Wall Street Journal, and other media outlets. He has testified several times before the U.S. Congress and the Federal Reserve Board. Prior to becoming a full time academic, he was a community development practitioner and affordable housing advocate in Chicago for over a decade.

Reviews

[Perez Malone · Rating 5 out of 5]

Wow. This was an excellent, sober, and utterly terrifying account of just what went wrong in the mortgage market. Learn how mortgage lenders came to dominate the market. Stand in awe as Federal officials continually deregulate for no good reason. Tear your hair out as you read quotes from reports predicting the crisis years before it happened. Slam your fist against the table as you learn about the myriad incentives for various actors to lie to each other.
I won't say it makes it easy to understand, but it makes it easier. Just come prepared to look up some of the more technical terms and you'll be fine. Nothing, however, will prepare you for the idiocy and willful blindness present in our financial system.

[Tim · Rating 5 out of 5]

Wow. This was an excellent, sober, and utterly terrifying account of just what went wrong in the mortgage market. Learn how mortgage lenders came to dominate the market. Stand in awe as Federal officials continually deregulate for no good reason. Tear your hair out as you read quotes from reports predicting the crisis years before it happened. Slam your fist against the table as you learn about the myriad incentives for various actors to lie to each other.
I won't say it makes it easy to understand, but it makes it easier. Just come prepared to look up some of the more technical terms and you'll be fine. Nothing, however, will prepare you for the idiocy and willful blindness present in our financial system.

[Liam · Rating 3 out of 5]

"One of the primary reasons that mortgage lending requires higher levels of regulation than most consumer markets is the damage that irresponsible lending can cause, to borrowers, to lenders, and investors, and also to parties that had nothing to do with the mortgage transaction -- neighborhoods, cities, and broader participants in markets that are indirectly affected." (15)

"[I]t became clear that investors had not distinguished the very large differences in the risks of a Baa corporate bond and a Baa CDO investment, for example, despite CDOs having five-year default rates that were fifteen times greater than similarly rated corporate bonds." (115)

[Datadrivencity.com · Rating 5 out of 5]

I read this book as part of a class on federal housing policy. Immergluck is an expert in this area, and I expected the book to be overly dense, but it wasn't. I was grateful to have such an easy to read, and yet accurate, account and the foreclosure crisis and its foundations. I recommend it. Recently, Immergluck has turned his attention to research on vacant property registration, and you can see the result of that research in this paper: http://papers.ssrn.com/sol3/papers.cf...

[Sean McTague · Rating 5 out of 5]

Helps explain the foreclosure crisis so that most people could understand. One or two chapters are pretty dense but a second reading will certainly come easier. Also helps clarify why Fannie and Freddie were not primarily responsible (although certainly players) for the housing crash