NCBRC Project Director, Tara Twomey, and co-author, Prof. Katie Porter, have written a chapter in the newly released book Shared Responsibility, Shared Risk: Government, Markets and Social Policy in the Twenty-First Century (Jacob S. Hacker and Ann O’Leary eds., Oxford University Press 2012). The chapter, “Risk Allocation in Home Ownership,” focuses on how changes in mortgage contract terms increased home ownership risks for families. After discussing how recent decades of mortgage product innovation both increased the risk of home ownership and shifted more of that risk to borrowers, the chapter offers three core principles to guide the future regulation of mortgages. “First government should collect comprehensive reliable data on mortgage products and should monitor the way in which those products allocate the risks between borrowers and lenders. Second, any effort to rebalance the risks inherent in the mortgage process must consider consumers’ limited abilities to evaluate complex financial products. Third, any successful regulation of mortgage products requires the development and deployment of effective enforcement tools for consumer protection laws.”
