A/HRC/34/51 20. Prior to the advent of mortgage-backed securities in the 1980s, the provision of credit for a housing purchase was generally an individualized contractual relationship between a single lender, usually a bank or a savings and loan institution, and a single creditor or homeowner. Mortgage-backed securities were promoted as a means of attracting additional lenders into the mortgage market by reducing the reliance on local financial institutions. They allowed for portfolios of mortgages to be bundled together, in order to distribute the risk more evenly among all of the mortgages, and sold to investors in the form of bonds or investment instruments on secondary bond markets. That created new conditions for global capital to be invested in housing finance. 13 21. The 2008 global financial crisis revealed the fragility, volatility and predatory nature of financialized housing markets and the potential for catastrophic outcomes both for individual households and for the global economy. In the United States of America, there were an average of 10,000 foreclosures per day in 2008, and as many as 35 million individuals were affected by evictions over a five-year period.14 Not only had people lost their homes but they faced personal financial ruin. 22. Many expected that the global financial crisis and its impact on the human rights of millions of households would act as an alarm bell, forcing States and international financial institutions to reassess the value of unbridled financialization and introduce reforms to ensure that the financial system addressed rather than exploited the housing needs of lowincome households. Unfortunately, it seemed to have the opposite effect. Individuals and families who were affected by the crisis were often blamed for taking on too much debt and new rules and regulations were put in place to restrict their access to mortgages. Austerity measures cut programmes on which they had relied for access to housing options, and the march towards the financialization of housing continued. The States that were the most severely affected by the crisis assumed responsibility for billions of dollars’ worth of distressed debt (high-risk mortgages) and arranged for them to be sold off to private equity funds, thereby increasing rather than decreasing the role and power of corporate finance in national housing systems.15 23. States have continued to focus on attracting capital and wealthy investors with reduced taxes and other benefits. Countries like Cyprus, Greece, Portugal and Spain, where harsh austerity measures have been implemented, have enacted policies to entice foreign investors into their domestic markets. 16 One such measure, colloquially known as the “golden visa”, allows foreign investors to receive permanent residence or even citizenship in exchange for a minimum amount of investment in property: €500,000 in Spain and Portugal, €300,000 in Cyprus and €250,000 in Greece. 17 Australia has a similar programme for individual foreign investors who purchase $A 5 million in real estate through a real estate investment trust to qualify for an Australian significant investor visa. 18 Programmes 13 14 15 16 17 18 See Aalbers, The Financialization of Housing. Sassen, Expulsions, p. 128. Debt and Development Coalition Ireland, “From Puerto Rico to the Dublin docklands: vulture funds and debt in Ireland and the global South”, 2014, pp. 4-9. Available from www.debtireland.org/download/pdf/ddci_vulture_funds_report.pdf. Xiangming Chen and Julia Mardeusz, “China and Europe: reconnecting across a new silk road”, European Financial Review, vol. 2 (February 2015), p. 8. See, for example, Spain, Act No. 25/2015, art. 63; Greece, Act No. 4146/2013, art. 6 (2); and Portugal, Act No. 23/2007, amended by Act No. 29/2012. See also “Living, buying property and doing business in Cyprus”, available at www.cyprusinformation.com/. See Australia, “Explanatory statement: select legislative instrument No. 102, 2015”, attachment D (Subclass 188 (Business Innovation and Investment) visa). See also Dallas Rogers, Chyi Lin Lee and Ding Yan, “The politics of foreign investment in Australian housing: Chinese investors, translocal sales agents and local resistance”, Housing Studies, vol. 30, No. 5 (2015). 7