Secondary Mortgage Markets and Place-Based Inequality: Space, GSEs and Social Exclusion in the Philadelphia Region Michael H. Norton Temple University, 2015 Doctoral Advisory Committee Chair: Dr. Anne Shlay In 2015 virtually the entire US mortgage market is subsidized by US taxpayers. When the Federal Government took control of the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac in the summer of 2008, US tax payers assumed responsibility for the vast majority of outstanding mortgage debt in the country. This dissertation examined the historical development and contemporary activity of the secondary mortgage market to understand the way the secondary market contributes to the reproduction of place-based inequality in American cities. Specifically, this dissertation analyzed the political-economic history of the secondary mortgage market to ground a contemporary analysis of the impact of secondary mortgage market activity on neighborhood change in the Philadelphia region at the turn of the 21st century. At the turn of the 21st century secondary market institutions coordinated a financial production process referred to in this study as the financialization of space. This process transforms the individual spatial relationships between individuals and their homes into financial commodities that are bought and sold by financial institutions. Individual mortgage loans make the financialization of space possible by providing the raw material that transmits capital embedded in the social spaces of individual homes and communities through secondary market institutions and into the abstract spaces of international capital markets. However, the financialization of space itself is made possible by a number of key contradictions that created considerable tension between the ongoing expansion of finacialized space and mortgage lending to individual home owners. These tensions were built into the very framework of the legislative policies governing the secondary mortgage market. The evolution of the secondary mortgage market was informed by parallel streams of housing policy that alternately sought to expand and regulate the primary and secondary mortgage markets at the end of the 20th century. The confluence of these policy streams initially created the conditions for the GSEs to pioneer financial productions processes that led to the financializaiton of space. At the same time, the emergence of subprime lending in the primary market, combined with the expansion of the secondary mortgage market to unregulated, private institutions, created dual housing markets differentiated by the types of loans available in the primary market and the funding sources for these loans in the secondary market. Throughout the study period (1996 – 2007), the GSEs concentrated the vast majority of all their purchasing activity buying conventional loans in the more affluent areas of the region. On the other hand, private institutions steadily eroded GSE market share in the conventional market, represented virtually the entire secondary market for subprime loans, and were considerably more active purchasing loans made to borrowers in communities that had been historically excluded from the primary mortgage market. Secondary market activity from 1996 to 2007 was significantly associated with changes along key housing and socio-economic conditions from 1990 to 2010. GSE market share was significantly associated with changing homeownership levels in neighborhoods throughout the region from 1990 to 2010. Higher levels of GSE market share were associated with net increases in homeownership in neighborhoods throughout the region. In a similar way, GSE-informed changes in homeownership levels were subsequently associated with significant changes in the percentage of residents living in poverty in neighborhoods throughout the region from 1990 to 2010, particularly on the Pennsylvania side of the region. Unlike the relationship between secondary market purchasing and homeownership, the relationship between secondary market purchasing and poverty levels functions through housing - either by virtue of more affluent residents moving in, or poor residents moving out of these areas. In both instances, GSE market share, and GSE-informed changes in homeownership sharpened differences between the different communities depending on where the GSEs concentrated their purchasing activity. The region’s urban centers, where GSE market share was lowest, experienced the greatest reductions in home ownership throughout the region, and the greatest increases in neighborhood poverty levels. In addition, the spatial relationships between individual neighborhoods exerted significant influences on changes in each of the housing and socio-economic indicators assessed. These findings suggest that space itself, and the spatial relationships between neighborhoods, exerted a significant influence on both secondary market activity and changing neighborhood conditions throughout the Philadelphia region. Over the twenty year period observed in this study, the types of differences between neighborhoods in the region have remained largely the same, while the degree of these differences has intensified during this time. In this way, the spatial distribution of neighborhood types in the Philadelphia region informed secondary market at the turn of the 21st century, which in turn contributed to the intensification of the differences between neighborhood types throughout the region. The findings presented in this study point to a number of key implications for theorists seeking to explain the role of space and place in the (re)production of patterns of uneven-development in metropolitan regions, and for understanding the financializaiton of space. In addition, these findings also point to key insights for policy makers currently developing legislation to reform the secondary mortgage market. / Sociology

An efficient housing finance system has significant importance both in meeting the housing needs of individuals and in reinforcing the development of the construction, finance and other related sectors of an economy. Today, developed countries have advanced housing finance systems in which funds flow from savers to home-buyers by the mortgage markets. On the other hand, despite its recognized economic and social importance, housing finance often remains under-developed in developing countries mainly due to the lack of macroeconomic stability. Turkey, being a developing country, has made an important step towards the development of a mortgage system with the passage of the new Mortgage Law by the Parliament. Accordingly, the purpose of this thesis is to examine the applicability of mortgage system in Turkey. For this purpose, housing finance systems of some developed and developing countries are reviewed, and the housing finance system in Turkey is explained. Further, causality between the total amount of housing loans issued, inflation and nominal interest rates in Turkey is analyzed with the Toda-Yamamoto VAR approach. VAR analysis shows the negative impact of nominal interest rates on the total amount of housing loans issued in Turkey. To sum up, considering its economic and social environment, Turkey has adapted best international experiences, and it is possible for a mortgage system to develop in the country by the new mortgage legislation combined with the lower interest rates as inflation declines.

This dissertation explores the ways in which housing markets based on mortgage-backed homeownership develop in an emerging economy. This is a case study of the institutions, actors, and financial practices at play. It contributes to the debates in the areas of the financialization of housing, the production of urban space, and economic globalization. I focus on developments in Peru from 1990-2014. During this period Peru’s national government implemented the country’s first major housing policy, which focused solely on the provision of homeownership and more specifically, making it easier for households to borrow money for the purchase of a new home. Through these actions, the government laid the foundation for a housing market that would be based on access to credit. This was a fundamental shift in Peru. This dissertation examined these developments and asked a number of questions. How were homeownership and the production of mortgages supported through Peru’s national policy? How had global actors and institutions facilitated homeownership and its financing? And lastly, were homeownership strategies being used as a tool for urban development? For this research, I applied an institutional approach to highlight the deliberate ways in which homeownership was supported in Peru. I focused on international, national, and local officials as well as developers and lenders who influenced the availability or scarcity of mortgage finance and the construction of new homes. I focused on the political and economic arrangements that transform the built environment into pieces that can be bought and sold. I collected data for this research from 1.) archival records and documents from Peruvian institutions and international financial institutions (IFIs) and 2.) interviews with representatives from these organizations, often identified in the records (n=36). Data from archival research and interviews were used to explore the interplay between interests, power, and ideas between national and international institutions. This allowed me to bring the temporal chain of events into focus and develop the causal connections between actions and support from IFIs. I also examined the extent to which the government’s agenda and priorities coincided and diverged from the priorities set forth by the IFIs. Findings illustrate a compelling story about an important aspect of modern day urbanization in a globalizing world where efforts are underway to expand transnational networks of finance and investment. Homeownership is not a natural phenomenon as we may be led to believe; instead, it reflects interests aimed at expanding the financial sector, investment in the built environment and, ultimately, the global economy. Overall, by examining the institutional and spatial nexus buttressing homeownership in Peru, this study demonstrates how land and housing across the globe are being incorporated into a market system and subsequently, how these practices intensify the accumulation of capital in cities. In Chapter 3, I trace the institutionalization of homeownership in Peru and the key motivations behind such actions. Since the 1990’s, the government has introduced policies and programs that promote homeownership as the primary response to the country’s lack of affordable and adequate housing. Similar to the US, the government has taken a leading role in arranging the housing and finance sectors for the creation of a mortgage-based housing market. Peru’s homeownership policy has embraced many neoliberal principles and is aimed at the restructuring of the housing market. The national government created the conditions so that the private real estate market could be arranged for the extraction of value. The premise being that once ‘enabled’, the private sector could meet the housing needs of low-income and other vulnerable populations. The government’s general approach was to reduce market informality (i.e., through titling and registration) and build confidence among residents and the private sector in a seemingly predictable institution of ownership and housing finance (i.e. through financial incentives and public promotion). Findings show that efforts to integrate these markets resulted in housing assistance for the creditworthy and created the assumption that one needed a loan to live in a house. Housing became increasingly treated as a product to be bought and sold on the market instead of a social good. And homeownership as the lynchpin tying the housing and financial sectors together. Chapter 4 highlights the role of IFIs in developing homeownership in Peru. Findings show that the government worked closely with IFIs to set up a strong mortgage market that would support widespread homeownership and the development of a secondary mortgage market. The national government and IFIs shared varying levels of consensus around engaging the private sector in housing provision, financial sophistication and standardization in mortgage lending, and deepening the financial sector. The case of Peru is useful for understanding the role of the national government in developing institutionalized mechanisms for housing finance and how this role has been facilitated by IFIs. These findings serve as an empirical example of global capitalism at work. Chapter 5 demonstrates how mortgage-backed homeownership in Peru was also linked to place-making and urban development. Housing constructed and purchased with FMV subsidies was developed in urbanizing areas and concentrated in certain neighborhoods. This was not by accident and instead, the concentration of FMV properties throughout Peru revealed the speculative nature of such decision-making. Homeownership was part of a larger strategy to root investment in certain places and create more value within the built environment upon which loans could be made. Mortgage-backed homeownership requires certain amenities and structuring that create and protect the value of housing and the surrounding neighborhood. In this way, housing policies have the power to generate a particular type of urban development to segregate groups and to concentrate investment in certain places. Finally, it is important to recognize that these findings are not unique to Peru. Practices to support mortgage-backed homeownership are taking hold across the world and are being led by national and international actors. I refer to the spread of these practices as the globalization of homeownership. The concept captures the economic, political, and ideological aspects of mortgage-backed homeownership. First, this research revealed the spread of a homeownership ideology. Despite the recent housing crisis that led to financial repercussions across the world, policymakers in Peru continue to have faith in mortgage-backed homeownership. Findings demonstrate how norms and taken-for-granted beliefs surrounding debt-encumbered homeownership become are transferred and institutionalized. Second, efforts to support homeownership in Peru and many other emerging economies are not insular. Guidance and upfront financing to establish critical institutions to support homeownership, such as mortgage guarantees and entities developed to support the primary and secondary mortgage markets, have come from a network of transnational actors. These recommendations and projects are in line with other efforts to promote economic liberalization and open markets. Lastly, I refer to the spread of national governments devoting resources to expand access to housing finance as the globalization of homeownership. Homeownership has become an international practice to intensify land values, create a market system within housing, and promote economic globalization through mortgage-backed homeownership. As homes become regarded as commodities, actual homes, mortgages, and other practices and institutions associated with homeownership are becoming more similar across countries. The infrastructure surrounding homeownership in Nigeria, now resembles that of Peru. These practices impose market principles in the organization of housing sectors, bolster investor confidence, and promote the flow of capital in and out of housing markets. The globalization of homeownership will remain an important area of study because of the impact it has on international, national, and local economies and the stratification it imposes on households and places. Capital will flow to certain places and creditworthy households will benefit. These efforts are in line with other neoliberal reforms and reflect a reliance on the market to meet the needs of those able to participate. This is to suggest that access to mortgage credit will increasingly structure housing and spatial opportunities across the globe and likely lead to greater inequality. / Sociology

This thesis deals with the problem of banks in connection with mortgage loans and mortgage bonds. Its main aim is the research and analysis ot the market with mortgage bonds and mortgage loans in the Czech and Slovak Republic. The work also takes into concern the so discussed integration of European mortgage markets. The thesis is divided into five chapters. The first two chapters are theoretical and are focused on the legislature and the feature of bonds and mortgage bonds. One of the components is the problem of mortgage banks and mortgage loans. The practical section is divided into three chapters. The first chapter is focused on the position of mortgage banks in the Czech and Slovak Republics in the framework of the bank´s sector in the given country. The banks are evaluated on the basis of economic criteria including balance sheets, net profit, initial capital, capital feasibility, number of branches and number of employees. The final part of this section is the evaluation and comprison of the Czech and Slovak bank sectors and their comparison with the European Union. The second chapter deals with entities conducting in the field of mortgage banking and the evaluation of their position in the framework of the Czech and Slovak Republic. The third chapter evaluates the present state and predicts further developments of the bank market in the area of mortgage bonds and mortgage loans. The problem of the integration of mortgage markets in the European Union is included.