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Mortgage Securitization, Structuring and Moral Hazard: Some Evidence and Some Lessons from the Great Crash

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  • Robert Van Order

    (George Washington University)

Abstract

Securitization provides borrowers with access to capital markets, most notably as an alternative to bank lending. However, it has also used complicated structures in order to attract investors. Complicated structures can provide, and have provided, vehicles for hiding risk and inducing moral hazard, which were at the center of the Great Crash. This paper provides descriptions of structures and increasing complexity over time. It suggests where moral hazard would have been expected to show up, empirically, and provides some evidence of moral hazard based on the timing of the changes in the structures.

Suggested Citation

  • Robert Van Order, 2018. "Mortgage Securitization, Structuring and Moral Hazard: Some Evidence and Some Lessons from the Great Crash," International Real Estate Review, Global Social Science Institute, vol. 21(4), pages 521-547.
    • Handle: RePEc:ire:issued:v:21:n:04:2018:p:521-548
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Securitization; Subprime; Moral Hazard;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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