Subprime Outcomes: Risky Mortgages, Homeownership Experiences, and Foreclosures

Subprime Outcomes: Risky Mortgages, Homeownership Experiences, and Foreclosures

Foreclosures of Subprime Mortgages in Chicago: Analyzing the Role of Predatory Lending Practices

A dramatic rise in subprime foreclosures over the past several years has led to calls for restrictions of, or prohibitions against, a range of lending practices loosely termed “predatory.” Several cities and states have enacted legislation or regulations aimed at eliminating predatory practices, and some advocacy groups have endorsed action nationally. This working paper uses data from the Chic...

Optimal Stopping and Losses on Subprime Mortgages

Lender losses on mortgage loans arise from a two-stage process. In the first stage, the borrower stops making payments if and when default is optimal. The second stage is a lengthy and costly period during which the lender employs legal remedies to obtain possession and execute a sale of the collateral. This research uses data on subprime mortgage losses to explore the role of borrower and coll...

The Unraveling of the American Dream

Based in large part on the increased availability of new mortgage products that were often aggressively marketed to minority households, a generally healthy economy, and government policies that encouraged homeownership, a substantial number of Black, Hispanic, and foreign-born households became homeowners in the last 15 years. As a result, the homeownership rates for these demographic groups r...

Anatomy of a Train Wreck: Causes of the Mortgage Meltdown

Why did the mortgage market melt down so badly? Why were there so many defaults when the economy was not particularly weak? Why were the securities based upon these mortgages not considered anywhere as risky as they actually turned out to be? It is the thesis of this paper that, in an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting ...