Money for Nothing and Checks for Free: Recent Developments in U.S. Subprime Mortgage Markets
IMF Working Papers, July 1, 2007
Source details
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- Money for Nothing and Checks for Free: Recent Developments in U.S. Subprime Mortgage Markets
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Bibliographic details
- Authors: Paul S. Mills, John Kiff
- Published: July 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451867527.001
Summary
- After a number of warning signs, the U.S. "subprime mortgage crisis" became a headline issue in February 2007.
- Notwithstanding the bankruptcy of numerous mortgage companies, historically high delinquencies and foreclosures, and a significant tightening in subprime lending standards, the impact thus far on core U.S. financial institutions has been limited.
- The paper reviews the history and structure of the subprime market and explores potential solutions to a key trade-off.
Key findings and analysis
- New origination and funding technology appear to have made the financial system more stable.
- The same technological changes have undermined the effectiveness of consumer protection regulation.
- The paper assesses the history and structure of the subprime market to support these conclusions.
Policy implications and potential solutions
- The paper explores potential solutions to manage the trade-off between increased financial stability from new origination and funding technologies and weakened consumer protection regulation.
- Specific policy recommendations are discussed in the paper (details not reproduced on the landing page).
Subject and keywords
- Subject: Credit, Housing prices, Loans, Mortgages, Securities
- Keywords: borrower, loan, mortgage, securitization, subprime mortgage, tranche, WP
Content in this bundle
- 1. Homeownership Rate