Identifying, Managing and Mitigating Risks to Borrowers in Changing Mortgage and Consumer Credit Markets

UCC08-14: This paper concentrates on the management and mitigation of mortgage risks: the kind of credit risks that face the majority of indebted households. For several decades now both the US and UK governments have sought to extend home purchase ‘down market,’ encouraging and indeed requiring lenders (for example in the US via the Community Reinvestment Act (1970) and the Home Mortgage Disclosure Act) to extend secured credit to previously ‘under-served’ areas in order to build an asset-base for welfare (Case and Marynchenko 2004). At the same time, lenders and governments have encouraged both higher and lower income households to use mortgages to secure borrowing for all kinds of purchases, including those required to meet basic welfare needs (Smith 2005)…