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Evidence from the US Mortgage Default Crisis

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Este paper, titulado The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis, puede ser interesante. Abstract:

We conduct a within-county analysis using detailed ZIP code–level data to document new findings regarding the origins of the biggest financial crisis since the Great Depression. The sharp increase in mortgage defaults in 2007 is significantly amplified in subprime ZIP codes, or ZIP codes with a disproportionately large share of subprime borrowers as of 1996. Prior to the default crisis, these subprime ZIP codes experience an unprecedented relative growth in mortgage credit. The expansion in mortgage credit from 2002 to 2005 to subprime ZIP codes occurs despite sharply declining relative (and in some cases absolute) income growth in these neighborhoods. In fact, 2002 to 2005 is the only period in the past eighteen years in which income and mortgage credit growth are negatively correlated. We show that the expansion in mortgage credit to subprime ZIP codes and its dissociation from income growth is closely correlated with the increase in securitization of subprime mortgages.

Ingresos cayendo y el crédito subiendo. Qué locura.

¿Culpa de la titulización? ¿Culpa de la política monetaria de la Fed? ¿Culpa de las políticas gubernamentales orientadas a fomentar la propiedad inmobiliaria de personas y barrios de bajos ingresos? O un poco de todo.

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1 Monex, día

In many cases the growing use of low- or no-documentation mortgages sometimes called liar loans allowed people to exaggerate their incomes and receive loans that they were not qualified to receive. On top of this was the growing proclivity to use a second mortgage to pay a down payment to an unwitting first mortgage lender -- prime or subprime -- with the lender believing that the borrower had no other significant debt obligations. While the hapless borrower soon defaults the perpetrators receive their fees up front at closing and all losses are borne by the downstream holder of the resulting mortgage or by the participants who warranted the quality of the mortgage.