IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2007-188.html
   My bibliography  Save this paper

Money for Nothing and Checks for Free: Recent Developments in U.S. Subprime Mortgage Markets

Author

Listed:
  • Mr. Paul S. Mills
  • Mr. John Kiff

Abstract

After a number of warning signs, the U.S. "subprime mortgage crisis" became a headline issue in February 2007. Notwithstanding the bankruptcy of numerous mortgage companies, historically high delinquencies and foreclosures, and a significant tightening in subprime lending standards, the impact thus far on core U.S. financial institutions has been limited. This paper reviews the history and structure of the subprime market. The results suggest that new origination and funding technology appear to have made the financial system more stable at the expense of undermining the effectiveness of consumer protection regulation. Potential solutions to the management of this trade-off are then explored.

Suggested Citation

  • Mr. Paul S. Mills & Mr. John Kiff, 2007. "Money for Nothing and Checks for Free: Recent Developments in U.S. Subprime Mortgage Markets," IMF Working Papers 2007/188, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2007/188
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=21200
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vladimir Klyuev & Paul Mills, 2007. "Is Housing Wealth an “ATM”? The Relationship Between Household Wealth, Home Equity Withdrawal, and Saving Rates," IMF Staff Papers, Palgrave Macmillan, vol. 54(3), pages 539-561, July.
    2. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, vol. 88(Jul), pages 281-310.
    3. Souphala Chomsisengphet & Anthony Pennington-Cross, 2006. "The evolution of the subprime mortgage market," Review, Federal Reserve Bank of St. Louis, vol. 88(Jan), pages 31-56.
    4. Mr. Vladimir Klyuev & Mr. Paul S. Mills, 2006. "Is Housing Wealth An 'ATM'? the Relationship Between Household Wealth, Home Equity withdrawal, and Saving Rates," IMF Working Papers 2006/162, International Monetary Fund.
    5. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, vol. 88(Jul), pages 281-310.
    6. Mark Doms & Meryl Motika, 2006. "The rise in homeownership," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov3.
    7. repec:bla:jfinan:v:44:y:1989:i:2:p:499-508 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. International Monetary Fund, 2007. "United States: Selected Issues," IMF Staff Country Reports 2007/265, International Monetary Fund.
    2. Bhardwaj, Geetesh & Sengupta, Rajdeep, 2012. "Subprime mortgage design," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1503-1519.
    3. Courchane, Marsha J. & Darolia, Rajeev & Zorn, Peter M., 2014. "The downs and ups of FHA lending: The government mortgage roller coaster ride," Journal of Housing Economics, Elsevier, vol. 24(C), pages 39-56.
    4. Benítez-Silva, Hugo & Eren, Selçuk & Heiland, Frank & Jiménez-Martín, Sergi, 2015. "How well do individuals predict the selling prices of their homes?," Journal of Housing Economics, Elsevier, vol. 29(C), pages 12-25.
    5. Jaffee, Dwight M. & Quigley, John M., 2009. "The Government Sponsored Enterprises: Recovering From a Failed Experiment," Berkeley Program on Housing and Urban Policy, Working Paper Series qt8v17v5vz, Berkeley Program on Housing and Urban Policy.
    6. Neil Bhutta, 2009. "Regression discontinuity estimates of the effects of the GSE act of 1992," Finance and Economics Discussion Series 2009-03, Board of Governors of the Federal Reserve System (U.S.).
    7. Matteo Luciani, 2015. "Monetary Policy and the Housing Market: A Structural Factor Analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 30(2), pages 199-218, March.
    8. Ebner, André, 2013. "A micro view on home equity withdrawal and its determinants: Evidence from Dutch households," Journal of Housing Economics, Elsevier, vol. 22(4), pages 321-337.
    9. Caporale, Guglielmo Maria & Costantini, Mauro & Paradiso, Antonio, 2013. "Re-examining the decline in the US saving rate: The impact of mortgage equity withdrawal," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 215-225.
    10. Jörg Bibow, 2010. "Alternative Strategien der Budgetkonsolidierung in Österreich nach der Rezession," IMK Studies 03-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    11. Eva Terberger, 2009. "Subprime-Krise, strukturierte Finanzierung und die Förderung der Mikrokreditvergabe," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(1), pages 40-55.
    12. Dwight Jaffee & John M. Quigley, 2012. "The Future of the Government-Sponsored Enterprises: The Role for Government in the U.S. Mortgage Market," NBER Chapters, in: Housing and the Financial Crisis, pages 361-417, National Bureau of Economic Research, Inc.
    13. Buiter, Willem H., 2010. "Housing wealth isn't wealth," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-29.
    14. Mark J. Flannery & W. Scott Frame, 2006. "The Federal Home Loan Bank system : the \"other\" housing GSE," Economic Review, Federal Reserve Bank of Atlanta, vol. 91(Q 3), pages 33-54.
    15. Ms. Evridiki Tsounta, 2011. "Home Sweet Home: Government's Role in Reaching the American Dream," IMF Working Papers 2011/191, International Monetary Fund.
    16. Andreas Pfingsten, 2009. "Das Sub-Prime-Virus: Ursachen und Folgen der Finanzkrise," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(1), pages 14-24.
    17. Lewis, Mervyn K., 2009. "The origins of the sub-prime crisis: Inappropriate policies, regulations, or both?," Accounting forum, Elsevier, vol. 33(2), pages 114-126.
    18. Himanshu (No last name available), 2013. "Poverty and Food Security in India," ADB Economics Working Paper Series 369, Asian Development Bank.
    19. David C. Wheelock, 2008. "The federal response to home mortgage distress: lessons from the Great Depression," Review, Federal Reserve Bank of St. Louis, vol. 90(May), pages 133-148.
    20. Frederic S. Mishkin, 2007. "Housing and the monetary transmission mechanism," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 359-413.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2007/188. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.