What caused the foreclosure crisis: Lax underwriting or home value declines? - 12/20/09 02:31 PM

Via Spencer Rascoff (Zillow):
In this interesting working paper from the Altanta Federal Reserve, economists look at every residential mortgage in Massachusetts from 1989 to 2008 to determine the cause of the foreclosure crisis. They conclude that home price depreciation was more to blame than lax underwriting standards. Lax underwriting didn't help, but it wouldn't have been such a big issue were it not for declining home values.
From the paper's abstract: "...[we] conclude that the foreclosure crisis was primarily driven by the severe decline in housing prices that began in the latter part of 2005, not by a relaxation of underwriting … (0 comments)

 
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