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Outcomes of the Subprime Mortgage:

I came across an interesting paper on the Stingy Investor today published by The Federal Reserve Bank of Boston titled Subprime Outcomes: Risky Mortgages, Homeownership Experiences, and Foreclosures.

I won’t comment on the findings or conclusions drawn by the authors, but it provides meaningful insight into how this group of products was sold to consumers, the risks involved and the outcomes of a decline in housing prices.

Mike over at Four Pillars also contributes an interesting article today titled Zero Downpayment On A House Is Just Fine that I published a comment on to contrast his importance of affordability in a mortgage with some security in home equity.

I may in the future write a post (or series) illustrating my personal beliefs on the topic of home ownership as this seems to generate much discussion in public and private conversations about the merits of various structuring options and the lessons the subprime mortgage crisis provides to investors and home owners alike.

{ 2 comments… add one }
  • Four Pillars May 9, 2008, 12:19 am

    Thanks for the link.

    The whole real estate situation in the US is quite fascinating. It’s very difficult to separate the actual problems from the media exaggerations….


  • Nurse B, 911 May 9, 2008, 7:16 am

    Equally good article Mike – definitely generates discussion on a topic that many people just take for granted from their “trusted” bank representative.

    I’m about halfway through the paper (long sucker!!!) so I might get a chance to comment on some of the findings – but interesting nonetheless.

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