Book Review Corner - Our Lot: How Real Estate Came To Own Us By Alyssa Katz
Our Lot: How Real Estate Came To Own Us
Published by Bloomsbury
The author addresses the subject of the Mortgage Market from a historical perspective. I particularly like this approach; the more detailed the better, as far as I am concerned. Ms. Katz defines the forces that have influenced the Mortgage Market: The Government, Wall Street, Mortgage Bankers, Bankers and Community Activists. In fact the book begins with well intentioned Community Activists wanting to help people get into better housing and home ownership. She describes how this group, with pure intentions, set into motion Government policies that would lead to the Mortgage Market Collapse in 2007 and then the Financial Implosion in 2008.
She concentrates on the Mortgage Market since the days of securitization and CRA (Community Redevelopment Act). She states that both of these events combined to set the stage for a real estate and mortgage collapse that is going to be with us for a good while. She is not so much blaming as she is educating the reader on the roots of Mortgage Market Collapse.
In addition, she provides a lot of facts that are really interesting and revealing. Here are two:
“Two firms, Lehman Brothers and Bear Stearns, generated more than $200 billion between them by packaging those loans. Their fees varied, but generally an investment bank could expect to net about one quarter to one half of a penny for every dollar they threw out there.” Page 87
“Other urban activist groups had already succeeded in convincing some lenders to be more flexible, which they could be when they used funds from their own deposits to make the loans instead of selling the mortgages to Fannie Mae. The Community Reinvestment Act provided the means. Banks were now required to make loans or investment in their own backyards, no matter how desolate and activist groups now had a way to block the expansion of any financial institution that didn’t play along. Members of the Philadelphia chapter of Association of Communities for Reform Now, or ACORN, found a willing partner in First Fidelity Bank.” Page 22
I think this is a good historical read. Her facts are so interesting and on point that I found myself highlighting them. “One of Freddie Mac’s first subprime deals, in 1999, financed nearly $800 million in mortgages from Ameriquest, on its way to backing $5 Billion in subprime loans.”
After you read it, let me know what you think. Particularly, let me know if it benefited you and how. Enjoy.