The number of nonprime mortgage originations grew rapidly from 2000 through 2006, a period during which average house prices appreciated dramatically. The nonprime share of mortgage originations rose from 12% in 2000 to 34% in 2006. As house prices subsequently fell, the subprime and Alt-A market segments contracted sharply. Borrowers who had obtained nonprime mortgages earlier in the decade increasingly fell behind on their mortgage payments. This report: (1) provides info. on the performance of these nonprime loans as of 6/30/09, and describes forecasts made by others of future loan performance; and (2) examines the extent of negative home equity among nonprime borrowers in selected metro. areas and nationwide.

This is a print on demand edition of a hard to find publication. The surge in mortgage foreclosures that began in late 2006 and continues today was initially driven by deterioration in the performance of non-prime loans. Non-prime mortgage originations increased dramatically from 2000 through 2006, rising from 12% of all mortgage originations to 34%. The non-prime market contracted sharply in mid-2007, in response to increasing defaults and foreclosures for these loans. This report: (1) provides info. on the performance of non-prime loans through 12/31/09; (2) examines how loan and borrower characteristics and economic conditions influenced the likelihood of default of non-prime loans; and (3) describes the features of data on non-prime loan performance and borrower characteristics. Illus.

The decline of home prices in many parts of the country has left millions of homeowners with negative home equity, meaning that their outstanding mortgage balances exceed the current value of their homes. A substantial proportion of borrowers with active nonprime mortgages had negative equity in their homes as of June 30, 2009. For ex., among the 16 metro areas examined, the percentage of nonprime borrowers with negative equity ranged from about 9% (Denver, CO) to more than 90% (Las Vegas, NV). This report examines, at the state level, the estimated proportion of nonprime borrowers with active loans that were in a negative equity position and the proportion that were seriously delinquent on their loan payments from 2006 through the end of 2009. Illus.

Provides an overview of the subprime mortgage securitization process and the seven key informational frictions that arise. Discusses the ways that market participants work to minimize these frictions and speculate on how this process broke down. Continues with a complete picture of the subprime borrower and the subprime loan, discussing both predatory borrowing and predatory lending. Presents the key structural features of a typical subprime securitization, documents how rating agencies assign credit ratings to mortgage-backed securities, and outlines how these agencies monitor the performance of mortgage pools over time. The authors draw upon the example of a mortgage pool securitized by New Century Financial during 2006. Illustrations.

In this lively new book, Kathleen C. Engel and Patricia A. McCoy tell the full story behind the subprime crisis. The authors, experts in the law and economics of financial regulation and consumer lending, offer a sharply reasoned, but accessible account of the actions that produced the greatest economic collapse since the Great Depression.

This interdisciplinary volume illuminates housing's impact on both wealth and community, and examines legal and policy responses to current challenges. Also available as Open Access.

Presents the ideas & opinions of many subprime mortgage market participants observers on subprime borrowers, their default experience, & subprime lenders' underwriting practices. Representatives of lenders, trade associations, Fannie Mae & Freddie Mac, rating agencies & other market experts talked with the authors about the complex issues related to a larger GSE role in the subprime market. Chapters: what is subprime lending & who does it serve?; a brief history of subprime lending; underwriting & pricing practices; the GSEs & subprime lending: current & future roles; automated underwriting & risk-based pricing; automated underwriting systems in today's lending environment; & policy issues & recommendations.

Conventional wisdom held that housing prices couldn’t fall. But the spectacular boom and bust of the housing market during the first decade of the twenty-first century and millions of foreclosed homeowners have made it clear that housing is no different from any other asset in its ability to climb and crash. Housing and the Financial Crisis looks at what happened to prices and construction both during and after the housing boom in different parts of the American housing market, accounting for why certain areas experienced less volatility than others. It then examines the causes of the boom and bust, including the availability of credit, the perceived risk reduction due to the securitization of mortgages, and the increase in lending from foreign sources. Finally, it examines a range of policies that might address some of the sources of recent instability.