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The Mortgage of the Future

Easy-to-get, overly complicated home loans inflated a bubble that popped disastrously. Though we’re still in the middle of the crisis, it’s time to devise a safer housing finance system so this won’t happen again

Samuel Perez has a steady job running trains for the New York City subway system on the No. 4 line. His wife, Rosemarie, earns a reliable paycheck as a unionized school bus driver in the Bronx. In 2003 they bought a semi-attached, two-story house in unfashionable western Staten Island for $246,000—as cheap as New York City real estate gets. With two children and a foster child at home, they’re not big spenders. “We haven’t taken a vacation in years,” Rosemarie says.

If you’ve paid any attention to the U.S. housing market over the past four years, you probably know where this is headed.