Monday, May 24, 2010
Benito Arrunada (Universitat Pompeu Fabra) & Amnon Lehavi (Interdisciplinary Center Herzliyah--Radzyner School of Law) have posted Prime Property Institutions for a Subprime Era: Exploring Innovative Models of Residential Development and Finance. The abstract:
This paper breaks new ground toward contractual and institutional innovation in models of homeownership, equity building, and mortgage enforcement. Inspired by recent developments in the affordable housing sector and in other types of public financing schemes, this paper suggests extending institutional and financial strategies such as time- and place-based division of property rights, conditional subsidies, and credit mediation to alleviate the systemic risks of mortgage foreclosure. Alongside a for-profit shared equity scheme that would be led by local governments, we also outline a private market shared equity model, one of bootstrapping home buying with purchase options.