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Selected Works

Patricia A. McCoy

Banking and Finance Law

PDF

2017

Articles 1 - 5 of 5

Full-Text Articles in Law

Why Cyclicality Matters To Access To Mortgage Credit, Patricia A. Mccoy, Susan M. Wachter Oct 2017

Why Cyclicality Matters To Access To Mortgage Credit, Patricia A. Mccoy, Susan M. Wachter

Patricia A. McCoy

Virtually no attention has been paid to the problem of cyclicality in debates over access to mortgage credit, despite its importance as a driver of tight credit. Housing markets are prone to booms accompanied by bubbles in mortgage credit in which lenders cut underwriting standards, leading to elevated loan defaults. During downturns, these cycles artificially impede access to mortgage credit for underserved communities. During upswings, these cycles make homeownership unnecessarily precarious for many who attain it. This volatility exacerbates wealth and income disparities by ethnicity and race. The boom-bust cycle must be addressed in order to assure healthy and sustainable ...


Has The Mortgage Pendulum Swung Too Far? Reviving Access To Mortgage Credit, Patricia A. Mccoy Oct 2017

Has The Mortgage Pendulum Swung Too Far? Reviving Access To Mortgage Credit, Patricia A. Mccoy

Patricia A. McCoy

In the wake of the financial crisis, mortgage lending to lower-income and minority borrowers overcorrected and has not recovered. Although homeownership is a riskier investment than previously realized, still it remains a proven path to increased wealth on balance for lower-income households. There are a number of reasonable reforms that could achieve greater access to credit while containing default risk. These include strategies to reduce down payments safely and to keep monthly payments manageable, combined with fixed-rate loans. Prepurchase counseling is important to preparing applicants for the financial demands of homeownership and strengthening their credit histories, while rapid foreclosure prevention ...


Foreword, Patricia A. Mccoy Oct 2017

Foreword, Patricia A. Mccoy

Patricia A. McCoy

In the wake of the financial crisis, mortgage lending to lower-income and minority borrowers overcorrected and has not recovered. Although homeownership is a riskier investment than previously realized, still it remains a proven path to increased wealth on balance for lower-income households. There are a number of reasonable reforms that could achieve greater access to credit while containing default risk. These include strategies to reduce down payments safely and to keep monthly payments manageable, combined with fixed-rate loans. Prepurchase counseling is important to preparing applicants for the financial demands of homeownership and strengthening their credit histories, while rapid foreclosure prevention ...


A New Coalescence In The Housing Finance Reform Debate?, Patricia Mccoy, Susan Wachter Mar 2017

A New Coalescence In The Housing Finance Reform Debate?, Patricia Mccoy, Susan Wachter

Patricia A. McCoy

This policy brief examines recent proposals for reform of the housing finance system.


Representations And Warranties: Why They Did Not Stop The Crisis, Patricia Mccoy, Susan Wachter Mar 2017

Representations And Warranties: Why They Did Not Stop The Crisis, Patricia Mccoy, Susan Wachter

Patricia A. McCoy

During the run-up to the 2008 financial crisis, representations and warranties (contractual statements enforceable through legal action) may have given investors false assurance that mortgage loans were being properly underwritten. This assurance in turn may have contributed to overinvestment in mortgage-backed securities in two ways. First, the assumption that legally enforceable penalties associated with reps and warranties would deter lax underwriting may have led to less monitoring of these contracts than would otherwise have occurred. In turn, the lack of monitoring of actual underwriting practices enabled the spread of lax lending practices. The existence of these reps and warranties and ...