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The United States has a unique mortgage product, and its design was almost an accident. The United States is the only country in the world where consumers have easy access to a long-term, fixed-rate, low-down-payment mortgage with no prepayment penalties. (Denmark comes closest, but borrowers there must put at least 20 percent down in order to obtain a mortgage.) As recently as 2002 or so, the American mortgage system was the envy of the world, and many countries sought to emulate it. The path to the American mortgage was not straightforward, and it arose as the result of a series of policy choices--some of which had to do with housing, and some of which had to do with attempts to...
