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Top Economist Talks of Mortgage Crisis Ripple Effect

Michael Stegman calls for innovation to improve lending habits.


At a recent conference that questioned whether the mortgage pendulum has swung too far, keynote speaker and former White House advisor Michael Stegman, above, stressed the importance of safe loans and pushed for innovation from the lending community to rectify imbalances created by the housing crisis of 2008.

“The housing and rental markets are two sides of the same coin, and policymakers must understand that problems and pressures in one market will have great implications for the other,” he told the gathering co-hosted by the BC Law Rappaport Center for Law and Public Policy and the Boston College Journal of Law and Social Justice. For example, he said, “the number of renters increased by over nine million over the past decade, the largest 10-year gain on record, many of them being young people and low-income families who cannot buy a home, but need long-term loans to help cover rental expenses.”

Stegman, who was introduced by Professor Patricia McCoy as “one of the premier housing economists in the country,” called for lenders to “provide a range of housing options and alternative housing structures” for many disadvantaged and vulnerable classes of society, including accessory dwelling units for older adults. He also emphasized the importance of field research, saying that it “has helped produce effective strategies to assist some of the most vulnerable members of society, the homeless.”

Stegman served as the assistant secretary for policy development and research at the Department for Housing and Urban Development in the Clinton Administration, and counselor for the Treasury Secretary for Housing Finance under the Obama Administration. He believes that “there’s an important leadership role for the federal government, which must assess the impacts of federal laws and regulations on the production and preservation of affordable homes.”

Three panels of experts, among them many former and current lending officials and regulators from think tanks and government institutions such as the Federal Reserve, the Massachusetts Affordable Housing Alliance, the American Enterprise Institute, and the National Economic Council, took up related issues of the housing failure.

They discussed how reactions to the subprime crisis may have resulted in too many creditworthy borrowers from lower and middle income families being turned down for home mortgages. They looked at the reasons behind continuing lending caution almost eight years post-crisis. And they proposed ways to expand access to safe mortgage credit.

Photograph: Christoper Soldt, MTS, BC

Keynote Speaker: Michael Stegman
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Panel 1:  The Current State of Access to Credit

Moderator: Gary Klein, Senior Trial Counsel, Massachusetts Office of the Attorney General
Neil Bhutta, Principal Economist, Federal Reserve Board
Tom Callahan, Executive Director, Massachusetts Affordable Housing Alliance
Jonathan Spader, Joint Center on Housing Studies, Harvard University
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Panel 2: Innovative Approaches to Accessing Credit

Moderator: Kathleen Engel, Professor, Suffolk Law School
Clark Ziegler, Executive Director, Massachusetts Housing Partnership
Dr. Roberto Quercia, Center for Community Capital, University of North Carolina (Chapel Hill)
Lisa Davis, Program Officer, Ford Foundation
Edward Pinto, Resident Fellow and Co-director, International Center on Housing Risk, American Enterprise Institute
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Panel Three:  Primary and Secondary Market Dynamics

Moderator: Edward Kane, Professor of Finance, Boston College

Patricia McCoy, Liberty Mutual Insurance Professor, Boston College Law School
Dr. Susan Wachter, Albert Sussman Professor of Real Estate, Professor of Finance, University of Pennsylvania
Laurie Goodman, Co-director, Housing Finance Policy Center, The Urban Institute
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