Jacob Werrett

Document Type



Recent economic fallout has revealed that the United States mortgage industry needs reform. Unlike other similar industries, the mortgage lending industry lacked fundamental safeguards such as centralized regulation, adequate capital reserves, sufficient insurance backstops, and strict federal oversight. As a result, loose lending spawned reckless buying which, in turn, led to financial disaster. In the wake of catastrophe, the federal government intervened; regardless of whether federal intervention was necessary to prevent systemic calamity, the solution was insufficient to create long-term stability and exposed the economy to moral hazard. This Note explains what happened in the mortgage industry, how it affected the national economy, and what solution can be deployed to help avoid systemic risk in the future.