For many generations, homeownership has been the primary means of building wealth in the U.S. It has also increased liquidity in the economy as households use home equity to finance major life events such as college education and retirement, and homebuilding sectors. The mortgage loan, the principal vehicle making all this possible, plays a more significant role in our financial system.

As a financial instrument, the mortgage is an underlying contract used to generate traded securities and insurance products, an asset that supports balance sheets of financial institutions and something that is used in the pricing of investment products and real assets. As such, a mortgage, over its life cycle, can be viewed and managed as a container of vital information on the dynamics of household spending and wealth accumulation. In its amended form, as the asset base is leveraged and securitized, with new data derived over the lifetime of the contract, the information is a key component of economic indicators.

Information surrounding mortgages is continually updated, amended and consumed in various analyses that have significant impact on liquidity and capital allocation in the economy. Understanding this information is crucial to managing aggregate risk for financial institutions. Unfortunately, that lesson came too late.