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Johnson Crapo GSE Discussion Draft
Commentary from Laurie Goodman, Ellen Seidman     Posted: April 14, 2014

Over the past several years, a consensus has developed on the goals of GSE Reform: preserve the liquidity of the mortgage market while protecting the taxpayer by putting private capital in a first loss position, retain wide access to long-term fixed rate mortgages, provide access and equity for lenders of all sizes, and support affordable housing. Senators Tim Johnson (D-SD) and Mike Crapo (R-ID) released new draft legislation in March 2014 striving to achieve these goals. While this bipartisan proposal is a major step forward for housing finance reform, we suggest improvements in two critical areas: the structure of the private capital in the first loss position and the affordable housing incentive fee provisions. In both cases, the system as proposed has intellectual appeal, but is apt to have unintended and undesirable consequences.


National Mortgage Settlement
Commentary from Laurie Goodman, Maia Woluchem     Posted: April 14, 2014

In early 2012, the nation’s five largest mortgage servicers entered into a $25 billion settlement with the Department of Justice, Department of Housing and Urban Development, and 49 state Attorney Generals. This settlement, which addresses questionable servicing practices, was the largest joint state-federal civil settlement in US history. As a result, Bank of America, Citi, JP Morgan Chase, Rescap/Ally and Wells Fargo have since dispersed more than $50 billion in gross relief to over 600,000 families. In this commentary, we examine each servicer’s strategies in providing relief to borrowers, consider how those actions were impacted by the settlement's crediting system, and suggest improvements for future settlements.


Housing Finance At A Glance: A Monthly Chartbook
Commentary from Laurie Goodman, Ellen Seidman, Jim Parrott, Jun Zhu, Wei Li, Bing Bai, Pamela Lee, Taz George, Maia Woluchem, Alison Rincon     Posted: April 15, 2014

At A Glance, the Housing Finance Policy Center's monthly chartbook, provides timely metrics on the state of the housing market and examines public policy's role in housing finance. April's issue includes a special quarterly feature on GSE loan performance and new numbers on the Federal Reserve's activity in the mortgage market.


Donald MarronTax Issues Facing Small Business
Testimony from Donald Marron     Posted: April 09, 2014

In testimony before the House Small Business Committee, Donald Marron examines how tax policy affects small business. Complying with the tax code places a disproportionate burden on small businesses. On the other hand, small businesses are more likely to underpay their taxes, sometimes inadvertently, sometimes not. Tax reform could shift the relative tax burden of small and large businesses and recalibrate the balance between pass-through and C corporation structures. The effect will depend on the details and may vary among businesses of different sizes, industries, and organizational forms. Reform also provides an opportunity to reduce compliance burdens on small businesses.


OASIS: A Securitization Born from MSR Transfers
Commentary from Laurie Goodman, Pamela Lee     Posted: April 01, 2014

Early in 2014, Ocwen Loan Servicing, the nation’s largest nonbank mortgage servicer, completed a new type of quasi-securitization to help Ocwen fund its servicing business, which has grown as mortgage servicing has shifted from depository institutions to nonbanks. This shift has occurred in response to Basel III regulations, which make it more costly than in the past for large banks to hold mortgage servicing rights. In this commentary, we describe the changing mortgage servicing market and the reasons for those changes. We then look at Ocwen’s new security, its purpose, and its appeal to investors.


Leonard E. BurmanPolicies to Support the Middle Class
Testimony from Leonard E. Burman     Posted: March 13, 2014

In this testimony before the Senate Finance Committee, Len Burman outlines some of the challenges facing the middle class in 2014 and explores policy options that might help better equip them to meet those challenges, including improving access to higher education and job training and consolidating and targeting education tax subsidies; slowing the growth of spending on health care; eliminating the carried interest loophole; encouraging saving by offering automatic contributions to 401(k)-like accounts for low- and moderate-income households; and replacing automatic price indexing with annual indexation adjustments designed to partially counterbalance changes in the distribution of income on a revenue-neutral basis.


Where Have All the Loans Gone? The Impact of Credit Availability on Mortgage Volume
Commentary from Laurie Goodman, Jun Zhu, Taz George     Posted: March 13, 2014

The total number of purchase mortgages originated in 2012 is considerably less than half of peak levels, and down 44% from the 2001 levels. The authors estimate that a large portion of the drop-as many as 1.2 million loans in 2012 alone-can be attributed to low credit availability, and find that African American and Hispanic borrowers have been disproportionately affected by the credit box tightening.


Jim  ParrottLifting the Fog around FHA Lending?
Commentary from Jim Parrott     Posted: March 13, 2014

The Federal Housing Administration (FHA) is taking new steps to encourage lenders to extend credit to first-time homebuyers and other traditionally underserved borrowers. Jim Parrott explains the problem that has constrained FHA lending in recent years and how the FHA is attempting to solve it.


Addressing the "Benefits Cliff" and Encouraging Work for Welfare Recipients
Testimony from Heather Hahn     Posted: February 26, 2014

In this testimony before the State of Vermont House Committee on Human Resources, Heather Hahn discusses proposed changes to Vermont's TANF program, and more generally, the "benefits cliff" and work incentives that participants experience as they strive for self-sufficiency. Hahn explains how the key policy levers - asset tests and the earned income disregards - affect the benefits cliff and work incentives. She also places Vermont's Reach Up rules in the context of other states' TANF rules and discusses other important issues to consider in conjunction with changes in these rules.


The Mortgage Forgiveness Debt Relief Act Has Expired. Renewal Could Benefit Millions.
Commentary from Laurie Goodman, Ellen Seidman     Posted: February 14, 2014

At year end 2013 the Mortgage Forgiveness Debt Relief Act expired. Unless Congress extends it, debt on principal residences that has been forgiven or written down after 2013—through short sales, deeds-in-lieu, foreclosures or loan modifications will generally be treated as taxable income. We argue that the act is an important facilitator of principal-reduction modifications. Failure to renew is likely to generate little net revenue.