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Gentrification

Gentrification refers to the physical, social, economic, and cultural phenomenon whereby working-class and/or inner-city neighbourhoods are converted into more affluent middle-class communities, as by remodelling buildings, resulting in increased property values and in the displacement of the poor. Gentrification is a complex term that is difficult to define: it is a process that has inherent class connotations and is an extremely visible process that plays a key role in the physical and social form of contemporary cities. Gentrification is intertwined with change; as the community’s buildings undergo renovation and beautification, rents increase resulting in a displacement of old residents that are replaced by more affluent ones (see yuppies).

Sociologist Ruth Glass coined the term in 1964, which she defined using London districts such as Islington as her example:

One by one, many of the working class quarters of London have been invaded by the middle-classes - upper and lower. Shabby, modest mews and cottages - two rooms up and two down - have been taken over, when their leases have expired, and have become elegant, expensive residences […]. Once this process of ‘gentrification’ starts in a district it goes on rapidly until all or most of the original working-class occupiers are displaced and the whole social character of the district is changed.

Gentrification can be a politically contentious issue. Gentrification highlights the instability of renting, whereby people might be forced to move away from newly desireable areas because the rent has now gone higher. Usually this conflict is limited to the local level and therefore many who live outside urban areas may not be aware of it. In response to gentrification pressure, cities in which there are more renters than owners often pass rent control ordinances.

Government National Mortgage Association

The Government National Mortgage Association (GNMA, also known as Ginnie Mae) was created by the United States Federal Government through a 1968 partition of the Federal National Mortgage Association. The GNMA is a wholly owned corporation within the United States, Department of Housing and Urban Development (HUD). Its main purpose is to provide financial assistance to low- to moderate-income homebuyers, by promoting mortgage credit.

The GNMA serves a major purpose in the U.S. financial arena by making investors’ money easily available to finance the purchase of homes in the United States by any buyer. It does this by guaranteeing the “securitizing” of large numbers of home mortgages. For example, a mortgage lender may sign up 100 home mortgages in which each buyer agreed to pay a fixed interest rate of 6% for a 30-year term. The lender obtains a guarantee from the GNMA and then sells the entire pool of mortgages to an approved bond dealer. The bond dealer then sells so-called “GNMA bonds”, paying perhaps 5% in this case, and backed by these mortgages, to investors. The original lender continues to collect payments from the home buyers, and forwards the money to the GNMA, and as these payments come in, the GNMA pays the 5% bond coupon payments to the investors. If a home buyer defaults on payments, the GNMA still pays the bond coupons, and if a home buyer prematurely pays off all or part of his loan, that portion of the bond is retired, or “called”, the investor is paid accordingly, and no longer earns interest on that proportion of his bond.

The arrangement seemingly benefits everyone involved:

* The mortgage lender has offloaded all risk to the GNMA, and has very quickly received a reimbursement of the money lent to home buyers from the bond dealer, and can immediately use this money to offer another pool of loans to the public.
* The home-buying public benefits from lower mortgage prices caused by the large amount of lender competition, in turn caused by a large supply of lenders, which is enabled by this quick reimbursement of money.
* The lower-income home-buying public benefits from a greater willingness by lenders to risk making loans to that group.
* The investors, whose money makes all of this work in the first place, benefit from the “full faith and credit” of the United States government; GNMA bonds are backed by the pool of mortgages, and even were massive defaults to occur, the U.S. government would make good on all payments. GNMA bonds also feature higher returns than other U.S. government issued bonds.

GNMA bonds themselves are considered risk-free from the standpoint of total default, but they are subject to risks that all other bonds have, including interest rate risk. They also have the undesirable attribute of an infinite number of “call dates”, meaning that, unlike other bonds, a GNMA bond might suddenly “mature” next month, if all the homeowners decided to pay off or refinance their mortgages. This does not involve a risk of loss to the investor, but rather a premature payment of the principal, and now the investor has to go look for another investment for his money.

The GNMA says it has guaranteed securities on the mortgages for 28 million homes totalling over $2 trillion in its history, and guaranteed $175 billion in these securities in 2002.

Green belt

For other uses of the word Greenbelt, see Greenbelt (disambiguation).

A green belt or greenbelt is an area of largely undeveloped wild or agricultural land surrounding or neighbouring an urban area. A similar concept is the greenway which has a linear character and may run through the urban area instead of around it. The more general term in the U.S. is green space or greenspace, which may be a very small area such as a park.

In some countries, development in green belt areas is heavily restricted. Aims include:

* protecting the natural environment;
* improving air quality in urban areas;
* ensuring that urban dwellers have easy access to the countryside, with consequent educational and recreational opportunities; and
* protecting the unique character of rural communities which might otherwise be absorbed by expanding suburbs.

Sometimes, development jumps over the restricted greenbelt area, resulting in the creation of “satellite towns” which, although separated from the city by green space, function more like suburbs than independent communities.

The protection of green belts was pioneered in the United Kingdom, where there are fourteen green belt areas, covering 16,716 km², or 13% of England; for a detailed discussion of these, see Green Belt (UK). Another notable example is the Ottawa Greenbelt in Canada.