1. The Problem and Promise of Credit in American Life

This introductory chapter provides a background of America's real estate markets. Already by 1890, nearly half of U.S. households were owner-occupied, and a staggering four-fifths of farming households headed by people over the age of 60 were owner-occupied. Such high levels of homeownership required a massive amount of credit to circulate, and in the right way. This was no easy feat. Mortgages are risky and costly transactions, ones that many banks avoided, either partially or completely, for long periods of time. America's mortgage markets were also endemically unstable and inefficient. American mortgage markets are therefore old, expansive, morally supercharged, and highly consequential. All of this is ideal for a study of the social life of finance. Mortgage markets' long and troubled history also provides a context in which to understand the two cases at the heart of this book: securitization and federal credit. Both evolved as ways to manage the risks and costs associated with lending and, in so doing, improve the flow of credit across the nation.