Wednesday, January 7, 2015

New freddie mac board member

An Xudong, Raphael Bostic, Yongheng Deng, and Stuart Gabriel conduct two tests to evaluate the effects of GSE mortgage purchases on median house value and homeownership rate. They use data from 1990 to 2000 and test the hypotheses that GSE performance in targeted areas affects home prices. They use a list of sociodemographic characteristics and such independent variables as the price-to-income ratio, the annual growth in home prices, the supply constraint index, the percentage of the population age 65 or older, changes in household size, the change in minority percentage of the population, and the unemployment rate. They find that increased GSE activity is statistically associated with declines in neighborhood vacancy rates and increases in median home value.[18]

Professor Raphael Bostic was interviewed by KFI-AM about the Fannie Mae and Freddie Mac takeover. The federal government stepping in will mean more stability in the market and probably a drop in interest rates for some home loans, according to the story. “For California, it will be a good thing,” said Bostic, director of the Master of Real Estate Development program at SPPD. “[W]ith the recent increase in the loan limit for Fannie and Freddie, a lot of homeowners will have access to those cheaper mortgages.”

At USC, Bostic’s most recent work has been examining how mortgage finance institutions, such as Fannie Mae and Freddie Mac, have influenced the flow of mortgage credit through lenders that mainly originate high cost, or subprime, loans and through the Federal Housing Administration insurance program.
Bostic was nominated for his new role while on a leave at the Wagner School at New York University, where he has been a visiting scholar. He will be taking an extended leave from USC, where he has been for eight years, while he is working for the government.
Bostic said that addressing the nation’s housing problems will be a top priority in his new job.
“Clearly the structure of housing markets and housing regulation has been at the root of a lot of the problems that we have seen nationwide and in the broader economy,” he said. “There’s a whole host of things around mortgage structure that need to be resolved from rules for lending, disclosures, licensing, and I imagine at some point I will be engaged in all of those.”
“Housing is a core part of our urban place so you need to be thinking about housing if you are going to be thinking about how cities work and fit together,” he said. “Cities are the building block and backbone of our economic system and success, so understanding them is really central.”
The FHA is not Fannie Mae or Freddie Mac. Those entities buy up existing mortgages. The FHA is essentially in the insurance business, designed to encourage lending to riskier home buyers, those who have lower credit scores or don’t have the savings needed to put up a large enough down payment.
“FHA has historically been an entrĂ©e for a bunch of first time homebuyers to get access into home ownership,” says Raphael Bostic, a USC public policy professor and former HUD assistant secretary.
Bostic adds that the program with roots in the Great Depression has been especially important for minority home buyers.

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