1 / 11

Chapter 5

Chapter 5. Postwar Residential Finance. 5-1. Chapter 5 Learning Objectives. Understand the major forces that have changed and shaped the residential mortgage market since the end of World War II

najwa
Download Presentation

Chapter 5

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 5 Postwar Residential Finance

  2. 5-1 Chapter 5Learning Objectives • Understand the major forces that have changed and shaped the residential mortgage market since the end of World War II • Understand how changes in the inflationary environment forced changes in the types of institutions that originated mortgages and in the types of mortgages they offered

  3. 5-2 History Of Real Estate Finance Con’t • 1940s • Preoccupied with World War Two • Veterans Administration Created • 1950s • Decade of S&L Expansion and Stability • 1960s • Creeping Inflation • Disintermediation • Maturity Mismatch • Expansion of Secondary Mortgage Market

  4. 5-3 History Of Real Estate Finance Con’t • 1970’s • Inflation Increased from 6 Percent to 13 Percent • Interest Rate Increases Decreased Housing Affordability • Development of Adjustable-Rate Loans • 1980s • Regulatory and Tax Law Changes • S&L Debacle • Due-On-Sale and Creative Financing • Zombie Theory • FIRREA

  5. History of Real Estate Finance Con’t • Era of Creative Financing • Late 1970s and early 1980s • Advantages of FHA and VA loans • Assumable loans • Wraparound financing • Owner financing

  6. 5-4 History Of Real Estate Finance Con’t • 1990s AND INTO 2000s • Subsiding Inflation Resulted in Lower Mortgage Rates • Refinancing Craze • Baby Boomers Trading Up Increasing Demand for Up-scale Housing • Dominance of Secondary Mortgage Market, Primarily Fannie Mae and Freddie Mac

  7. 5-5 Important Dates In Real Estate Finance • 1932 – Creation of the Federal Home Loan Bank System • 1934 – Creation of Federal Savings and Loan Insurance Corporation (FSLIC) • 1934 – Creation of Federal Housing Administration (FHA)

  8. 5-6 Important Dates In Real Estate Finance • 1938 – Creation of Fannie Mae (Fannie Mae) • 1968 – Creation of Government National Mortgage Association (Ginnie Mae) • 1970 – Creation of Federal Home Loan Mortgage Corporation (Freddie Mac)

  9. 5-7 Important Dates In Real Estate Finance • 1979 - FHLBB Approved New Mortgage Designs: VRM, GPM, AND RAM • 1981 - Economic Recovery Act Produces The Accelerated Cost Recovery System (ACRS) • 1986 - Tax Reform Act Created Modified Accelerated Cost Recovery System

  10. 5-8 Important Dates In Real Estate Finance • 1989 - Financial Institutions Reform, Recovery, And Enforcement Act (FIRREA) • 1993- Tax Act of 1993 Eased Passive Loss Rules and Extended Nonresidential Depreciation From 31.5 Years to 39 Years

  11. 5-9 Important Dates In Real Estate Finance • 1997 - Taxpayer Relief Act of 1997 Established Maximum Long-Term Capital Gains Tax Rate at 20 Percent and Maximum Depreciation Recovery Rate of 25 Percent

More Related