The Evolution of the Subprime Mortgage Market

Chomsisengphet, Souphala; Pennington‐Cross, Anthony

doi:10.3886/icpsr01325.v1

Cited by 38 publications

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“…After 1998, which was also associated with consolidation in the industry, growth has come in the least risky portions of the market. This segment is typically referred to as A-lending and includes borrowers with impaired credit histories that are willing to pay a premium over the prime lending rate typically in excess of 290 basis points Pennington-Cross, 2006). …”

Section: Subprimementioning

confidence: 99%

The Delinquency of Subprime Mortgages

Danis

Pennington‐Cross

2005

SSRN Journal

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Abstract:The lag between the time that a borrower stops making payments on a mortgage and the termination of the loan plays a critical role in the costs borne by both borrower and lender on defaulted loans. While the prior literature uses a multinomial logit approach, statistical tests indicate that we cannot accept the associated assumption of Independence of Irrelevant Alternatives (IIA). Using a nested logit specification our results suggest that the recipe for delinquency involves young loans to low credit score borrowers with low or no documentation in housing markets with moderately volatile and flat or declining nominal house prices.

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Section: Subprimementioning

confidence: 99%

The Delinquency of Subprime Mortgages

Danis

Pennington‐Cross

2005

SSRN Journal

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“…The specific group of borrowers we study in this paper is the set of all post-1986 purchasers who were likely to have had negative equity in 1991:Q4, a time that we believe is comparable to the current situation in the housing cycle. 1 We find that of the 100,300 borrowers we identify as having negative equity in 1991:Q4, only 6,450 actually lost their homes to foreclosure over the next 3 years. The Massachusetts data also allow us to estimate the incidence of future mortgage defaults.…”

Section: Introductionmentioning

confidence: 96%

Negative equity and foreclosure: Theory and evidence

Foote

Gerardi

Willen

2008

Journal of Urban Economics

433

145

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Millions of Americans have negative housing equity, meaning that the outstanding balance on their mortgage exceeds their home's current market value. Our data show that the overwhelming majority of these households will not lose their homes. Our finding is consistent with historical evidence: we examine more than 100,000 homeowners in Massachusetts who had negative equity during the early 1990s and find that fewer than 10 percent of these owners eventually lost their home to foreclosure. This result is also, contrary to popular belief, completely consistent with economic theory, which predicts that from the borrower's perspective, negative equity is a necessary but not a sufficient condition for foreclosure. Our findings imply that lenders and policymakers face a serious information problem in trying to help borrowers with negative equity, because it is difficult to determine which borrowers actually require help in order to prevent the loss of their homes to foreclosure. Terms of use: Documents in EconStor may

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“…Finally, their loan could be sold or transferred to a third party (securitized) without their knowledge or consent. Some of these loan conditions have been specifically described in the literature as the essence of subprime lending (Chomsisengphet and Pennington-Cross 2006). Furthermore, these credit and debt agreements, which have been proven illegal in certain cases, became a form of financial predation that translated into devastating real life consequences for Ecuadorian migrants when, as in Cristobal and Angelica's case, monthly payments suddenly went through the roof while employment dwindled.…”

Section: Introductionmentioning

confidence: 99%

Debt revolts: Ecuadorian foreclosed families at the PAH in Barcelona

Suárez

2017

Dialect Anthropol

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Can present day grassroots direct actions be considered revolutionary? In this paper, I argue that seemingly Breformist^demands can be considered revolutionary in today's neoliberal capitalism. At the turn of the twenty-first century, working class Ecuadorian migrants in Barcelona were trying to join the global middle classes via subprime mortgage loans and despite their precarious jobs. Following the collapse of Spain's housing bubble, unemployed, defaulting on their mortgages, and risking home eviction, they turned to housing activism. They joined the Platform for People Affected by Mortgages (PAH) and became daily protestors for the right to housing and against indebtedness. Looking at PAH approaches that encouraged debt default among low-income families, strategies to reconvert repossessed homes by rescued banks into social housing units, or the effective occupation of buildings that belonged to these banks by the PAH to house evicted families, I claim that these moments represent revolutionary instances of a broader fight against indebtedness taking place globally which can be considered-as many did at the PAH-a fight against capitalism at large. In this paper I illustrate how people who had seldom participated in social mobilization became part of a small Barcelonan movement for the right to housing that grew exponentially throughout Spain succeeding in canceling thousands of mortgage debts and stopping equally as many evictions. PAH's spaces of encounter and action made possible a cross-class alliance upheld by weekly assemblies and near daily direct actions against financial institutions and a proausterity central government. These moments demonstrate the ability of everyday people to reclaim housing, redefine the narrative of indebtedness, and-in the case of Barcelona-it even made possible taking control of City Hall.

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The Evolution of the Subprime Mortgage Market

Cited by 38 publications

References 0 publications

The Delinquency of Subprime Mortgages

The Delinquency of Subprime Mortgages

Negative equity and foreclosure: Theory and evidence

Debt revolts: Ecuadorian foreclosed families at the PAH in Barcelona

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