The Professor will present the paper:

Housing Affordability via Macroprudential Policy
Traditional macroprudential restrictions on household borrowing promote financial stabil-ity and slow house price growth, but do so by excluding low-income borrowers from the housing market. We demonstrate how regulations mandating appraisal independence serve as sim-ilarly effective stability tools while simultaneously promoting housing affordability. Our analysis exploits three categories of US state-level regulations enacted between 2009 and 2019 that limit the ability of lenders and appraisal management companies (AMCs) to pressure appraisers to inflate valuations through compensation, improper audits, and blacklisting. Following regulatory changes, appraised values decline, reducing house prices by 6.5% over the following five years, with larger effects in areas with low housing supply elasticity. Explaining these results, we find that low appraisals lead to price renegotiation rather than contract termination. In addition, as the effects are greatest among more affordable housing, we observe a shift towards low-income and low credit score homeowners. Despite this shift, depressed house price growth also decreases monthly mortgage payments, leading to a lower mortgage delinquency rate in equilibrium.