Forbes has a fascinating article about mortgages and the lack of innovation.
Certainly we've seem some innovation in the mortgage industry, as mortgages were disaggregated into separate parts, re-bundled, and sold in different ways, but all almost that innovation was focused on post-mortgage processing, and the core mortgage has remained substantially the same. In the Forbes article, Bernard Condon argues for even more disaggregation. For example, at present the homeowner owns all the appreciation of the value of the house; why not let investors purchase some of that appreciation in return for lower interest rates?
I don't agree with all of Mr. Condon's rosy suggestions; I strongly suspect that some of the innovations he proposes would, if implemented, quickly degenerate into schemes to squeeze more money out of mortgage holders. But the fundamental ideas are sound, and Mr. Condon's main point is quite germane: Why is there so little true innovations in mortgage contracts?
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