Cover: Creative Financing in California

Creative Financing in California

The Morning After

Published 1983

by Ira S. Lowry


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"Creative financing" is the accepted term for certain methods of financing home purchases that were introduced in California during the 1970s and were common practice at the end of the decade. This report describes the growth of creative financing in the context of a major real estate boom that ended in 1981; it then examines the emerging consequences of creatively financed transactions — consequences for those who borrowed and those who lent, and also for future home-purchase transactions. The source of the data used is a survey of about 1,000 home-purchase transactions conducted in 1981 by California Technical Associates, Inc., under contract to the California Department of Real Estate. The author's recommendations for solving some of the problems connected with creative financing include channeling credit to home purchases, default management, and monitoring the market.

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